Cost basis in inherited royalty interest

Texas Mineral Rights Martin County, TX
1

I am preparing to sell a royalty interest in Martin County that I inherited from my parents. The short question is how do I figure out what the interest was worth in 1975 - hence, my basis for figuring capital gains tax.

The details (if you are interested): My father acquired the interest in 1957. The recorded deed recites $10 as the consideration and bears two 5 cent documentary stamps. My mother inherited from my father in 1974. She died in 1975 but we were unaware of the interests until about a year ago. The first well was drilled in 2012-13.

I can’t find information online as to the documentary stamp tax rate that long ago. Also, I presume the interest did not appreciate much in value until there was at least a colorable plan to drill.

Any help will be appreciated.

kbkester (note, I mistakenly posted this first in Reeves County so apologize if someone is seeing it twice)

2

$10 consideration is a standard number and does not represent the actual price paid. Without knowing the actual price paid, you could assume a basis of “0” to be safe, or you could hire a mineral appraisal company to tell you what your basis is based on when the minerals were inherited. You must determine if the savings from determining an inherited basis by using a mineral appraiser is worth the cost. Nonetheless, these will be long-term capital gains, so unless you make a ton of income you will likely pay either 0% or 15% in tax.

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