Inherited mineral rights from parent who passed years ago. Just sold the rights in Oklahoma for over $100K. Do we have any basis to offset the income? If so, how can we go about finding something for this for us to file our tax returns next year? Thx
Under the IRC, the basis upon inheritance is the value of the property at the time of death. Sometimes the Inventory will tell you how much they are appraised to be worth, but that's probably only if they had a substantial estate. Alternatively, some counties might appraise the minerals in their yearly property taxes, so you could look there (but often, the minerals are only taxed when they start producing income).
When you sold the minerals (and when your parents died) was there production on the property? If not, then it is possible that the minerals were considered to have no value, if that is the case, your basis would be Zero.
Thanks for the reply! The estate wasn't big enough and so long ago we don't have any of that paperwork. Will look into the property tax angle. Yes, there was production at time of sale.
Location, offers to lease or purchase, permitting, drilling and production activity in the immediate area, existing leases, are things that could indicate an expected value at the time of death or in the months preceding. Some of the data is available on industry data bases. Might be worth the effort especially in many Oklahoma counties.