I new to this forum and Oil and Gas Income. We've inherited small portions of 3 wells in Oklahoma and there is the possibility we will receive a check for more than 200K from Oklahoma for payments not made since 2006, much smaller amounts from California and Texas from various owners of the wells in the past. Our CPA said this amount of money - along with my normal income - would put us in the 33% Federal Tax Bracket. Since then, I learned if we filed jointly, we would be in the 28% Federal Tax Bracket ( I'm not sure since I'm not good at interpreting accounting laws) and we don't know what the Oklahoma state tax will be. Should we be using a CPA who has experience with mineral rights, or is there a way to assist our CPA in learning what taxes are required?
Also, what questions should we be asking or CPA to ensure he is up to speed on mineral taxes?
I may be reading your post wrong but you are not being necessarily taxed on minerals but on income from those minerals, you need to ask about the state tax on the production as a deduction, & the depreciation/depletion on the mineral income.
I would find out if you can amend your income tax filings starting on 2006 and include the income from each years income (when it SHOULD have been received/reported); not sure if this is possible, but it is reasonable, and will reduce the burden from a lump-sum income.
Do you know if there is a way to educate our cpa on all this short of asking him to learn an all new specialty? Do you suggest we change to a cpa knowledgeable or specialized in the arena of Oil and gas income.
Fot that amount of income, you should get an accountant familiar with mineral taxation or your accountant should be familiar with cost depletion or production depletion, if you have a working interest, OK withholding if you live out of state and you do, filing in OK (you may get some withholding back) If you have heirs and/or other minerals, you may want to get some expert advise on defraying inheritance taxes as a couple or individual. Lots to know abut before the decision of filing jointly or separately. If you inherited, the value and the cost of the assets at the time of inheritance may be important. If you receive royalties through a trust, your accountant needs to know the rules of the trust. If you file as an individual(s), and are self employed, you may be on a cash basis and not able to amend past tax returns but depletion may be better for you. Your accountant should be able to structure your tax return so you don't have to pay state taxes in both NV and OK.
I live in CO but own minerals and receive income from properties in 7 states including NV and OK. They are all different and I'm sure I save taxes by using an experienced accountant. I suggest your accountant find an advisor in Oklahoma.
Thank you for such detailed direction. Luckily Nevada doesn't have a state tax, but I'm pretty sure Oklahoma does. I will meet with my cpa soon and share your post...thank you so much!
Actually we have a very small portion of three oil and gas wells - the amount of money we are hoping to receive is for accumulated royalties, and then a small amount every month. I am familiar with the Eureka area, have you been there to visit your acreage?
I've made many trips to Eureka in the 20 + years I've managed the claims. I have personally drilled exploration holes and had a few lessees. The current lessee has published a resource report that exceeds 500,000 oz. of gold and only explored a third of the geologic structure. The lessee is reportedly drilling this year. I've had many a meal at the OWL in my time.
William Carlin said:
Good Morning Gary,
Actually we have a very small portion of three oil and gas wells - the amount of money we are hoping to receive is for accumulated royalties, and then a small amount every month. I am familiar with the Eureka area, have you been there to visit your acreage?
I have spent many a evening in the Owl :) What a small world! When they closed the Ruby Mine many years ago ( I hear it's open again) I was contracted to assist in the Job career counseling of the mine employees so they could find other meaningful work. This weekend A friend of mine has a "gig" at the old Opera house there. I would send you photos but don't know how to attach them here. Your advice in this Forum is very valuable for us. Thank you!