Members of my family own non-producing minerals in Section 725, Yoakum County. There have been leases at times, but they are not currently leased. We inherited these minerals in the early 80’s, and have recently received offers to sell. Don’t think we are interested in the lowball offers, but the question of establishing a cost basis for minerals inherited decades ago came up. Any thoughts on this, or recommendations for who can help determine a cost basis to see what potential tax exposure might be?
The cost basis is the value at the date of inheritance, less depletion deductions over the years, down to (but not below) zero. If you have the estate documents, there may be an appraisal or a list of assets with values. If the minerals were producing at the date of death, then you could establish an appraisal of the production at that time. Or if there was a lease close to the date of inheritance, consider that bonus (which would be small compared to today’s bonus). If the minerals have never been producing, then the estate value was probably viewed as minimal at date of death.