With names such as Rover, Leech Xpress, Mountaineer Xpress, Mountain Valley and Atlantic Coast, these projects will lay hundreds of miles of pipeline and also include the construction of numerous compressor stations and other equipment throughout their paths.
Always seek legal advice from a knowledgeable and qualified attorney when negotiating and signing legal agreements. It is recommended that legal counsel and the CPA coordinate their efforts from the inception of negotiations to ensure the deal takes advantage of any possible tax deferral strategies.
Your future use of the land and your children and grandchildren and greatgrandchildren, or someone’s great-grandchildren, will be dealing with the effects of this agreement. Take your time and be careful before you sign such an important document.
When a property owner grants a pipeline company rights to use property, determining the tax effects requires a careful analysis of the terms of the transaction. A typical transaction may include payments to the property owner for the permanent easement, rights-of-way, temporary access, crop payments and damages, which can all be treated differently for tax purposes. Multiple opportunities to defer gain exist. Pipeline infrastructure is needed and extremely active in our region. Educate yourself by calling Yourkovich CPA.
Easements commonly found in pipeline agreements can be taxed as capital gains. This could mean lower taxes.
Do you know you can defer the gain on Right-of-Way (ROW) and easement proceeds? See our 1031/1033 discussion on possible tax savings measures.
Did the pipeline developer evoke eminent domain to acquire land or easement through your property? See our 1031/1033 discussion on possible tax savings measures. Pipeline developers may have the authority to use eminent domain to acquire land if they can’t reach an agreement with a landowner.
A permanent right-of-way will have a lasting impact on your land. It will be a swath on which trees cannot be grown and upon which your surface use is otherwise limited. If you are a landowner approached for access to your property, know the tax consequences of these agreements before you sign.