Caveat---- This is my reaction-----technical term "knee jerk"--------have not spent a lot of time thinking about it.........

Objective--------- to keep the money/value provided to you by coal company as the compensation for moving in the NON taxable category, to the extent practical.

If you sell the house to them, ie the personal residence..............for their removal.............that is the sale of a personal residence.  Money received is not taxable to the extent of 500K on joint return/joint ownership--------- Section 121.  Always best to allow a large price to be allocated to the personal residence due to its 121 protection.

If they then hire you to demolish the property............amount received for doing that would be compensation for services, and taxable just as anyother earned income.

The amount received from coal company for moving/replacing the other buildings would most likely be compensation, and taxable..............
however................ to the extent that you re-invest the money into farm buildings, during 2011, that reinvestment would be deemed to be new capitalization, and just like overhauling a motor that has to be capitalized, such would be 100% deductible pursuant to section 168(k)...............therefore the income would be offset by the like capital input, and corresponding depr deduction.

What I have not thought about, or researched---------and which should be done----------- is how such is handled under the casualty rules.    

I don't think such would fall within them, since it is not a "sudden event not within the control of the taxpayer"..........but, there might be something in there---a court case---- which covers situation where a continuing and ever-growing problem results in falling within the casualty arena, and an out of court settlement of a problem.   Just don't know-------but needs to be looked at.

Be alert that this type of transaction would be subject to IRS scrutiny for having "contrived" elements--------say, like a large amount allocated to the house, and a small amount allocated to a fee for demolishing the house, etc etc..................so, I would not take this situation lightly, or look at it from the perspective "IRS probably won't audit me"-----------a lot depends on the coal company's tax people---------ie, you could handle it one way on your side, and suddenly have the coal co issue 1099's not favorable to your position..............so, work out the itty bittys before the close of the tax period.