1099 MISC. RENTS?

[Jake]

I have a client that received a 1099-Misc with an amount in Rents. The payment was from a pipeline company that is putting an oil pipeline through their backyard. My inclination is that this should not be taxable rather it should be an adjustment to the basis of the property. I don't want to just ignore it because it will certainly cause the taxpayer to receive a CP2000 notice. Any sugestions on how to handle?

Thanks for any help

[kcjenkins]

If the oil company bought an easement, it would reduce basis. But if, instead, as seems to be the case here, they are merely renting the right-of-way for a period of time, without any ownership change, then it would be treated as rent.