Can anyone help please? I inherited some mineral rights in 2009. The co owner and I are selling 25% of them. I know these have to be reported as income on federal return, but from what I understand, you can ease the tax burden by reporting their valuation in 2009. BUT how in the world do you find out what non producing mineral rights were worth, if anything, in 2009? They were leased several years, in 2004 and 2005 for 30,000 annual, but never drilled on.... Can anyone give me a direction to go on? I don't have an attorney or CPA. any help is appreciated....
Paula,
I think your sale has to be reported as income from capital gains from the time it was inherited until the sale. From your post, it appears that the minerals had some fair market value at the time of inheritance if you have the lease income documented. Those documents coupled with a review of the geologic potential at the time of death of the donor can establish a fair market value at the time. If there is much money involved in the transaction, you may want to get a CPA to look it over. They sometimes know of industry experts that can help you establish a "basis" for the sale.
Thank you, Gary!