In 2008, Terry purchased land for $150,000. In 2018, Terry received $10,000 from a local cable television company in exchange for Terry allowing the company to run an underground cable across Terry's 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.

Question

Quizplus · Accepted Answer

The payment received by Terry is considered a non-taxable return of capital because it represents a recovery of his investment in the land.

In 2008, Terry Purchased Land for $150,000