Display taxonomy term from id
To get the taxonomy term name from ID. 

function menu_custom_field_formatter_view($entity_type, $entity, $field, $instance, $langcode, $items, $display) {
  dpm($items);
  $element = array();
  foreach ($items as $delta =&gt; $item) { 
    $taxonomy = taxonomy_term_load($item['target_id']);
    $element[$delta] = $taxonomy-&gt;name;
  }  
  return array(
    0 =&gt; array(
      '#markup' =&gt; theme('item_list', array('items' =&gt; $item)),
    ),
  );
  return theme('item_list', array());
}


$taxonomy-&gt;name  will give you name of taxonomy term.

I hope this will help.
Thanks