My husband inherited mineral rights from his father who inherited from his aunt. Husband didnt know about it until a company wanted to drill. we have since sold the rights in 2024. Now we face tax season. How do we figure what the start date for his appraise would be.
Value at the date of death of his father, reduced by total depletion claimed over the years. If his father died decades ago, then the value at the time may have been very low. If you have had the minerals for a long time and there has been a lot of production, then it is not uncommon for the basis to be close to zero.
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Thanks for the reply. It has been over 20 years. since his father died.
Hire a CPA that does oil and gas, they will save you money and you wont be surprised by another tax bill in a year or 2 from cutting corners and doing it on your own.
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@Bob77 is giving solid advice. Depending on the step-up basis and your method of depletion, then your existing basis at sale could vary greatly. The good news is the sale should be long term cap gains. Good luck.