Assistance Needed to Determine 2008 Value for Tax Basis

Accounting and Taxes
1

In June I sold my surface and mineral interests in 80 acres in Reeves County. W2/NW4, Section 26, Block 50, T-7-S. My tax preparers now tell me that they need the value per acre of the property back in December 2008, which is when my mother passed away, leaving the property to me. Once they have that per-acre figure, the preparers can determine the tax basis and thus what I will owe on the capital gains. We would like to get this accomplished as soon as possible in 2017 in order to make Estimated Tax Payments sooner than pay a penalty later in 2018.

Can anyone tell me what is involved in determining this value? Who would do it? How long would it take? How much it would cost, roughly?

Thanks!

2

Hi Marshall -

Wouldn't the Taxable Value be reflected in the 2008 Tax Rolls? The Appraisal District or the Tax Collector should have their old records in storage somewhere.

Do you have anything showing what you received when you sold the property?

3

Hi, Charles--

Thanks for the kind reply.

Since my mother passed away in December 2008, I have been paying the Reeves County taxes and have kept all records. The tax value from 2008 through at least 2010 was $45/acre, or $3,600 for all 80 acres. The property was in my name, and I had executive rights, but any oil royalty was shared, 1/3 each with my sister and a nephew. We all sold our interests in late June/early July. We briefly were all going to sell to the same buyer, but after I signed, my sister and nephew pulled back, elected to keep playing the field and ultimately struck a deal with some other entity. As a record of how much I received, right now (1) I have my bank statement that reflects the wire transfer amount, and (2) I should be receiving a W-4 toward the end of the year.

My tax preparers--and the tax preparers of my sibling--both say they need the assessed value in 2008 in order to determine the tax basis. I'm sure that the $3,600 (or, $1,200 for my 1/3 interest) did not include minerals. For me and for my 1/3 interest, I received $580k+, so the $1,200 will hardly offset any capital gains.

Both the landmen with whom my sister and I dealt assured each of us that they would work-up the 2008 value. My landman assured me that this was not an unusual request and that he would "look out for me." He said that, at his end, it would take "just a couple phone calls," and he understood that the higher the 2008 valuation, the better (of course, within legal bounds) to reduce capital gains taxes, and he would provide something in writing for my tax preparer and my income tax return. He declined to charge me for the service. However, once I had my $$ and he had the deed around June 24, I have heard no more from him on the subject, despite repeated inquiries from me by email. My sister has had the same experience of "down a black hole" with her landman; same experience with my nephew.

So, here I am with money, but I cannot spend it because I don't really know how much I have (after 2017 taxes). I contacted Kenny Dubose, who understood my situation, but his business did not work-up these valuations for third-parties. Kenny suggested that I post on the website to see who could help me directly or who could point me to someone who could make the 2008 valuation. I certainly understand that there would be a charge for the service.

Any assistance would be hugely appreciated.

4

Marshall, we are trying to do the same thing. Please keep me posted regarding what you find?

5

Laura, I have what you need:

Steve Williams

www.williamsranchgroup.com

[email protected]

303-478-0555 and 8306431-1525

Called him today and the procedure was smooth. Very polite and patient. Told me what information he needed, which I sent to him by email. He responded in 2 minutes! I did not provide him your name, but I did tell him that "someone else on the mineral owners' website needed this service." He encouraged me to provide his contact info to you.

Hope this is helpful.

6

Marshall & Laura -

I'd love to hear what Steve had to say.

7

Not sure that I understand your comment, Charles. Steve really did not say anything other than he would work-up the valuation for me. The valuation will meet IRS standards for my use to determine the tax basis for my capital gains. I sent him the details of the property description, my interests, and the sale. He will provide documentation of the valuation, along with his credentials in case the IRS asks for them.

8

I'd like to see an example of the type of report he prepares. I've never seen one.

9

I would like to learn more about the TYPE of report he prepares as well. The Landman I hired to this purpose sent me a letter stating the value of the mineral rights, as we requested, but he provided no explanation for how the value was determined. He simply provided a per acre value. He is a Certified Landman.

Is this considered sufficient documentation for IRS?