I have just begun to receive royalties on a lease and trying to understand what my responsibilities are regarding taxes etc. I know that my three year lease has extended now that there is a active well. Some of the royalties are more than the other one I receive from the same operator. I believe maybe more than one well on same tract and in different location and pooled differently
Keep all of your check statements for seven years for IRS purposes. Depending upon the state, you may have different situations. In OK, the operator takes out the taxes for the state and your can choose to have federal taken out or deal with it yourself. Many times, I get a refund on OK taxes. In TX, you have to pay the CAD district for the local taxes. Contact your CPA for advice. Horizontal wells can be high performing in the first two or three years, so tax planning is wise.
Yes, wells can be completely different with regard to their revenue.
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