I know this has been discussed before, but it has been awhile. Since taxes are approaching, I am hoping to get some advice. My husband inherited mineral rights, which we recently sold. It was a very small 5.92 acres. Our monthly check had been reduced by approximately half by the time we sold it, which was only after receiving mostly checks for approximately 3 years. Usually, I do my taxes myself with turbo-tax, and I hate to pay for a valuation on such a small amount. Is it possible the minerals went down in value and would be a loss? Does anyone know if turbo tax will guide me through this, or do I have to pay a tax preparer/CPA?
Sale of minerals is a capital gains item to be reported on Schedule D. The sales price less your basis = net income to you - which will receive long-term capital gains treatment. Your basis is the value of the minerals at the time of inheritance reduced by the total depletion which you took over the years.
Try the search feature in the upper right corner and the Blog articles for some fairly exhaustive discussions on this in the past. Also ask your CPA whether your husband should have gotten a free step up in basis when he inherited the property.