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Tax Information

Understanding tax obligations and reporting requirements for mineral rights owners.

Tax Reporting Overview

As a mineral rights owner, you have specific tax obligations and reporting requirements. Understanding these requirements helps ensure compliance and maximizes your tax benefits.

Important Tax Documents

  • Form 1099-MISC: Reports royalty payments received
  • Schedule E: Reports supplemental income and loss
  • Form 1040: Reports total income including royalties
  • State Tax Forms: Varies by jurisdiction

Income Classification

Royalty Income

  • Regular production payments
  • Bonus payments
  • Delay rentals
  • Shut-in royalties

Other Income

  • Surface damage payments
  • Lease termination payments
  • Pipeline easements
  • Storage fees

Deductions and Credits

Common Deductible Expenses

  • Depletion Allowance: Percentage or cost depletion options
  • Professional Fees: Legal, accounting, and consulting expenses
  • Property Taxes: Related to mineral ownership
  • Travel Expenses: For property inspection or business meetings

Percentage Depletion Example:

Gross Income: $100,000
Depletion Rate: 15%
Depletion Allowance = $100,000 × 15% = $15,000

Tax Planning Strategies

Record Keeping

Maintain detailed records of:

  • Monthly revenue statements
  • Expense receipts
  • Property documentation
  • Tax returns and supporting documents

Estate Planning

Consider tax implications for:

  • Inheritance planning
  • Gift tax exclusions
  • Trust arrangements
  • Basis step-up opportunities

State-Specific Considerations

Common State Tax Issues

  • Severance Tax: Tax on resource extraction
  • Ad Valorem Tax: Property tax on mineral interests
  • State Income Tax: Varies by jurisdiction
  • Conservation Fees: State-specific assessments

Important Deadlines

Jan

January 31

Form 1099-MISC received from Carrizo

Apr

April 15

Federal tax return due date

Q

Quarterly

Estimated tax payments (if applicable)

Tax Assistance

While we provide general tax information, we recommend consulting with a qualified tax professional for specific advice regarding your situation.

Resources Available:

  • Annual tax documents through Owner Portal
  • Historical payment records
  • Production documentation
  • State-specific tax information
Access Tax Documents