We inherited the mineral rights to a property that my Grandfather had left to us. A traverse well was drilled thru our mineral right area. My grandfaters estate just received a 2022 1099NEC Block 1 for 94000 with 19000 witheld. We have no knowledge of this amount and Chevron will not correspond with us. As this amount appears in block 1 it indicates that we have a working interest in the venture. Is this 94000 the amount we 6 inheritors are are owed or an amount prior to dedcucting our share of operational etc. expenditures of the Chevron lease. We are dumb as dirt about the oil business so any help would be appreciated.
Before someone can help you figure this out they will need more information.
As a starting point, what State and County is this located in? It might help to go the “Counties” heading at the top of this page, navigate to your State and County and post your question there rather than this general category.
If you have it, some other information you might provide…1) Whether this mineral interest under lease, 2) The name of the well or producing unit covered by the 1099, or the legal description of the mineral interest you own. 3) Is Chevron not willing to correspond with you because the inheritance of your grandfather’s interest hasn’t been documented? 4) By “traverse” well, are you referring to a horizontal well that was drilled in an allocation unit rather than a pooled unit?
1099-NEC is usually issued for payments during the year. Did the Estate receive any revenues during 2022 and where were they deposited? Is it possible that the address changed and so checks were returned to Chevron? They would still be treated as paid during the year. What do you mean by “withheld” - lease operating expenses or income taxes or other? There should be detail at the bottom of the page, on the back of the page or on a second sheet for Gross Revenues, Various Deductions, State Income tax withholding (especially for OK or NM), and Federal Tax withholding if Chevron did not have a W-9 with federal tax identification number for the Estate. Has your Grandfather reported this income on his tax return in the past or is this the first year? Has the executor sent a certified letter to Chevron asking about the property? A phone call will generally not suffice, especially if Chevron does not know if the caller has legal authority to ask questions. Do you know where the property is located? Did your Grandfather own a lease or part of a lease (where third party is mineral owner and your grandfather was a lessee)? Or did he own the minerals and did not lease and the well has paid out and so he is now treated as a working interest owner? If it is minerals and the well just paid out, then perhaps Chevron sent division orders and has not sent a check because the division orders were not returned. The IRS will be looking for a tax return from the Estate or other named payee on the 1099-NEC. If you post more information, including the state, location and well / unit, you are more likely to get specific answers.
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