Good morning: We inherited 14.2 acres of mineral rights in Williams County ND in 2007. We are considering selling and don’t have any idea how to determine the cost basis in order to calculate capital gains tax. If anyone can steer us in the right direction we’d appreciate it. Thanks.
Basis is value at date of death of the person from whom you inherited - or one year thereafter. You should have detrmined this value for estate tax purposes. Good Luck
Thanks for your reply. The mineral rights transferred to us via a family trust so we didn’t have to file an estate tax return. I just don’t know how to determine what the value was then. They weren’t producing until later that year.
Try asking the former trustee
I was the trustee. I may have to use a zero basis.
Were the minerals in production at the time of inheritance? If not, the value would have been pretty close to zero back in 2007. If they were producing back then it should be a pretty simple matter to have them evaluated by an engineer for a few hundred dollars.
Depending on how big your pending sale is, the tax savings might or might not be worth the expense of an engineer’s report.
They went into production in late 2007. Thanks for the suggestion. I’ll look into getting an engineer’s report. It would be worth paying for a report.
Yikes, don’t take that hit. Hire a landman to provide you with the information. Unless it was a tiny sale of course.
That’s another good idea. No, it wouldn’t be a tiny sale, not huge but substantial.