Question regarding market value on mineral rights

We were offered $4500 per acre on 3.25 net acres. Is this a good price? 10-9N-4W

That section has a well pending. Your offer will be based upon your royalty. 1/8th royalty will get less than a 1/4 royalty. (usually about half as much). I have acreage in that section and was offered quite a bit more since I have a portion that is leased at 3/16th and some that is open.

I sold some a couple months back in Section 18-9n-4w for $8000/ac. Those were subject to a 1/8th lease.

I am in Section 24. I can’t imagine that was not top dollar for an 1/8 lease !

If you don’t mind, could you tell me what the tax implications were when you sold the rights? We are trying to figure out the best way to do it that it takes the least of the revenue since it’s being divided 8 ways for my mother’s grandchildren. Thanks!

The person or entity selling will mostly likely have to pay capital gains on the sale. That means that if you don’t have a basis cost documented by a source that the IRS will accept, you have a cost basis of zero and have to pay capital gains on the whole amount. If there has been a death and the step up value has been set by probate, then the capital gains tax is less. If you do not sell, then when the owner passes, the heirs will have a new step up value. Some heirs may wish to sell, some may not. Sometimes, it is better not to sell and wait for the royalties and the eventual step up value. Best to talk to your accountant before selling and get their expert opinion. Just because someone offers to buy, doesn’t mean you have to sell. Those folks offering to buy are pretty sure they are going to make a profit off the purchase.

Thank you! We were going to talk to our tax guy and see what they say. I really appreciate the response!