Tax Questions

Okay hypothetically let’s say there are multiple people receiving royalties on a single API. Everyone that receives royalties should pay taxes on the API right? I mean, why would someone pay taxes on an API if they’re not getting any of the royalties? Are there any laws in regards to that.

Your question is not clear. An API number is unique to each well. First 2 digits are state ( Texas is 42); second 3 digits are the county; and last 5 digits are the well. The revenues are divided among the operator, other working interests, mineral / royalty owners and overriding royalty owners, Each owner is taxed accordingly. If you were paid by the operator or oil and gas purchaser, you should receive a 1099 with a summary of your income from the payor.

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