So FIL has income from his mineral rights for a natural gas lease. The paralegal suggested I contact the producer, but I have serious doubts that they will give us any guidance on this. It is not an amount worth an appraisal but we do want to report it as an asset for probate. I have found a couple of conflicting valuations, but I have not found an actual IRS.GOV guideline:
One post I found on a mineral forum said "The IRS generally values producing minerals at 3X annual revenues for purposes of the estate tax caps." The other post I found said 2x. I would go to the higher valuation but I want to note the IRS guideline. I found a notation for the State of Pennsylvania, but FIL's home state is Michigan and I can't find anything there.
Can anyone point me to the irs.gov page that actually backs this up? TIA You guys always seem to find the most elusive stuff.
Post by imojoebunny on Apr 1, 2015 19:46:25 GMT -5
Yuckers. You have my sympathy on the loss of FIL. (Empathy is probably a better word). I have some weird gas partnership that my dad bought for me 35 years ago. My DH complains about it every tax season. I have no ideas on value, but I am really going to make DH do a real will based on your experience. (We have one, but it is very basic, not all this stuff).
You might want to talk to an O&G atty (I actually know someone who does O&G and estate planning in MI. )
ETA: If you have any documentation on any sort of production on the land, that is very helpful. And yes, I agree that the producer will likely give you the least value amount since it is their interest to lowball.
You might want to talk to an O&G atty (I actually know someone who does O&G and estate planning in MI. )
ETA: If you have any documentation on any sort of production on the land, that is very helpful. And yes, I agree that the producer will likely give you the least value amount since it is their interest to lowball.
Thank you! I know talking to an O&G attorney would probably be the wisest thing to do, but frankly the income is very minor (plus NG is currently worth less than $2.50/MCF which is laughable) so we really don't want to spend the fee to do so. This is only for probate reporting... we are never going to sell these rights and Mr. P is the only beneficiary. I do have the statements from Chevron and an end of the year statement so if I can find out the "accepted" calculation it will take me like a minute.
This morning, I even thought of just calling the clerk at the Probate Court and asking her if she knows how people report it. I am going to read through the treasury regs first and see if I can find it.
You might want to talk to an O&G atty (I actually know someone who does O&G and estate planning in MI. )
ETA: If you have any documentation on any sort of production on the land, that is very helpful. And yes, I agree that the producer will likely give you the least value amount since it is their interest to lowball.
Thank you! I know talking to an O&G attorney would probably be the wisest thing to do, but frankly the income is very minor (plus NG is currently worth less than $2.50/MCF which is laughable) so we really don't want to spend the fee to do so. This is only for probate reporting... we are never going to sell these rights and Mr. P is the only beneficiary. I do have the statements from Chevron and an end of the year statement so if I can find out the "accepted" calculation it will take me like a minute.
This morning, I even thought of just calling the clerk at the Probate Court and asking her if she knows how people report it. I am going to read through the treasury regs first and see if I can find it.
Let me ask my guy how people usually value this stuff since I can get that info for cheap (aka free ).