I am the trustee of a trust that contains mineral rights. I would like to establish the cost basis for capital gain tax purposes in the future. Is there a standard formula or process that I can follow or do I have to pay for an appraisal? Any help is appreciated.
Thanks, Lora
Very wise idea. My recommendation is to get an appraisal by a petroleum engineer. There are several good ones in Oklahoma City. The trust should pay for the appraisal. They are usually done on a well by well basis. The cost basis for the trust is probably the cost as of the day they went into the trust. The engineer can help you with that. They will also be able to give you an idea of what it is worth today. We do appraisals of our LLC every time one of the partners passes away as it is required for probate. Quite helpful to know where you stand.
I would appreciate any specific referrals if possible.