My family has had mineral rights in Dunn County North Dakota for many years. My parents recently received an offer to buy the mineral rights. They are offering $5200 an acre. I think my family should keep the rights but my parents want to take the offer and sell. Can anyone tell me if that is a good offer or not?
Thanks
My siblings and I inherited mineral rights in Dunn county from our grandfather. We have all been receiving offers to purchase our rights over the last year, some quite tempting. We have a current offer that is over twice the number you quote per net mineral acre. Bear in mind, however, that we have not received offers on all the mineral rights we own in Dunn county. They are typically limited to a particular parcel. I would expect it depends on the geology under the parcel in question. For what it is worth, we have chosen to not sell our rights.
There are lots of companies out there offering to buy mineral rights. In my experience, their first offers are usually low to what they have been authorized to offer. They would rather buy for a lower amount than a higher amount. The area of Dunn would be important to know as the geology is key to the offer amounts. Can you give the section, township and range?
Also, they should talk to their accountant as they may have capital gains on any sale. If they pass the minerals on to heirs, the fair market value has a reset and the next generation may not have as high a capital gain if they wish to sell. And in the meantime, your folks get the royalties, if any.
Your folks need to find out if there is pending activity in their area. Most offering companies want to make money on any deal that they do, so they usually don’t make offers in dead areas. They want future royalties.
Thank you for the responses. The Township is 144N, Range 94W and section is 23SW.
You can use this website https://www.dmr.nd.gov/oilgas/ to search for active wells in Dunn county (and elsewhere). It can help you make an assessment of activity in the area around the location of your mineral rights. The “Active Drilling Rigs” and “Well Search” can be helpful tools. Good luck!
With respect to capital gains, if I inherited from my parents and they from their parents is there a potential reset each time?
I am receiving offers in the 13k per NMA sec 9-146N-096w Dunn County sounds good, what do you think?
Yes, each time it is inherited, there is a reset on value. It must be documented well enough to prove it to the IRS. So if you recently inherited, you may need the executor to arrange for an evaluation. Or it you know you will inherit someday, provide for that to be done as of the date of death.
Stepped-Up Basis. See: IRS Page It states: To determine if the sale of inherited property is taxable, you must first determine your basis in the property. The basis of property inherited from a decedent is generally one of the following:
See also: 26 U.S. Code § 1014 - Basis of property acquired from a decedent .
In short, it is better to inherit appreciated assets. If you are gifted the asset during the person’s lifetime, then you will have the same basis as the giver.
No need to pay full capital gains if there is a basis. This is why it is better to inherit, rather than be gifted, appreciated assets.
Good Morning Glen,
Im an owner in an adjacent township, curious as to who is making 13K offers in the area? Any info helps. Thanks in advance
Scjake I just sold small acreage at $3250/NMA in Dunn county. 125N-95W-35. So your parent’s offer sounds pretty good.
