In 2009, Terry purchased land for $150,000.He also received $10,000 from a local cable television company in exchange for allowing the company to run an underground cable across his property.Terry is not required to recognize income from receiving the $10,000 because it was a return of his capital invested in the land.

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The payment received by Terry from the cable television company is considered a return of capital, not income, because it represents compensation for the use of his land.

In 2009, Terry Purchased Land for $150,000