Maybe an appointment with an accountant is in order. I just don't want any of this to be a burden tax wise or any other wise on my mom.
Tax Burden for simple mineral rights ownership? Yes, she will have to pay taxes on it. Talk to a CPA that is familiar with oil and gas income. Establishing an entity for the sole purpose of owning mineral rights will create more headaches and will not change your tax burden. It there are many properties, then it is possible there may be some advantages for management and estate purposes. But it is not going to reduce taxes. Sub-S corporations and most LLCs simply pass the taxes through to the owner(s). A Sub-C Corporation is a bit more complicated and can end up causing double taxation on dividends. Corporations also require establishment of officers, meetings, meeting minutes etc. LLCs are quite a bit more relaxed.
Talk to the CPA about withholding and quarterly payments. Sock back a bit extra just in case the figures are off when the final numbers arrive before April 15.
Focus on estate planning combined with method of management that addresses the mineral owner being incapacitated or their death.
That's some REALLY GOOD advice there! I do remember our accountant saying at one time that you couldn't just have money in a corporation you had to be doing some kind of business. Even when we sold our business we still have some rental property and can take off things like repairs, taxes and insurance on our taxes for it but there again you have to spend it to take it off and if you don't make any money you don't have to pay taxes. As they say "Dang if you do and dang if you don't". Uncle Sam's going to get his part so just put that part aside, pay estimated taxes as you go along and don't make it a burden come tax time.
Rick, do you think we should change to a LLC instead of the regular Inc. we are now? When we Incorporated we didn't know what a LLC was and I'm still not that sure I know now.
Linda,
You'd need to rely on your tax advisers on that. Type of Corp, corp owned assets, where they are at in depreciation, etc. You were in a unique situation where you already had one. Someone creating one just to put a couple of properties into is a different story. Sometimes LLCs are even created to reduce risk.
I manage 3 LLC's 2 owned by me and family members, one of my own. They each have a purpose. Reduction of risk, ease of management, ease of transferring ownership, estate planning, etc. There is still an overhead involved with an LLC, just not as much as a Corp.
Thanks, I go to see our tax adviser Friday and I plan to ask that question.
Burden may be too strong a word. I've never needed a CPA before and she hasnt in over a decade. Hassle would be more appropriate. Anything this lease produces would be a six way split between my mother myself and her four other children. Since its regarded as regular income to the IRS would it be better if the rights were split before any (God willing) production?
Advice a bookmaker gave me back in the 80s stuck with me. "Don't ever try to screw the IRS, you'll never win." So when i start thinking about IRS and audits my stomach churns, not from guilt, but that something i may have inadvertently done by ignorance will end up biting me in the gludious maximous.
To put the bookmaker in perspective, gambling isnt illegal in the eyes of the federal government as long as you have a tax stamp and report your income, which the bookmaker did. At the time illegal gambling in mississippi was a misdemeanor. Now that there are legal casinos it is a felony and the old bookmakers have all retired. I am not that bookmaker but he did employ me through most of the 1980s.
Hutch, I just noticed your Prism shirt. Roger Waters is coming out with a new album.(First one in over 2 decades) Heres a link with some info.
http://www.musiclipse.com/news/roger-waters-new-rock-album-for-2014
Thanks, you have a sharp eye!
Some rigs are made for walkin, and thats just what they'll do, i'm prayin one of these days they'll walk on my section too.
To the tune of the Nancy Sinatra hit. :)
Iris...I got your email but couldn't answer you back on this computer for some reason. Yes, I did get our check on Newfield a few days after it was posted. I guess the reason I couldn't answer your email was because I didn't have you address in this computer~don't really see why that would matter but it didn't give me a reply choice.
Does anyone know how to read the legal and/or reports on the North Dakota stuff? I have a friend that owns some royalty there as soon as she gets it changed over to her name from her dad's after his death. One problem she has is she hired a lawyer in ND and he has given her the run a round for about a year now. He was supposed to be working on getting it into her name. After she paid him (ahead of time) he quit answering his phone or returning her calls. She doesn't want to burn that bridge however as there just aren't very many attorneys out there in ND her Oklahoma attorney tells her and she might need to keep cool on this for a while anyway. She has a husband that has been disabled from a broken neck. Her dad passed away some time back but they are still sending his (royalty) mail to her address but she can't tell anything about it. She's coming to my house (she lives in Oklahoma) tomorrow morning for us to help her and I don't think we know enough about the Bakken stuff to help (except like the SCOOP it's nearly all great). If you can help us with this please post here or friend me and I'll send you some descriptions. We'd both appreciate your help. Thanks!
Linda, if you have better descriptions than you posted on the message wall in the McKenzie county forum, let me know. I replied to you there.
Linda Rigtracker said:
Does anyone know how to read the legal and/or reports on the North Dakota stuff? I have a friend that owns some royalty there as soon as she gets it changed over to her name from her dad's after his death. One problem she has is she hired a lawyer in ND and he has given her the run a round for about a year now. He was supposed to be working on getting it into her name. After she paid him (ahead of time) he quit answering his phone or returning her calls. She doesn't want to burn that bridge however as there just aren't very many attorneys out there in ND her Oklahoma attorney tells her and she might need to keep cool on this for a while anyway. She has a husband that has been disabled from a broken neck. Her dad passed away some time back but they are still sending his (royalty) mail to her address but she can't tell anything about it. She's coming to my house (she lives in Oklahoma) tomorrow morning for us to help her and I don't think we know enough about the Bakken stuff to help (except like the SCOOP it's nearly all great). If you can help us with this please post here or friend me and I'll send you some descriptions. We'd both appreciate your help. Thanks!
Rick...Guess you guys had a slow start in the run this morning but sun did come out and hope you had a really good one! Only found out this morning after church that our daughter in law and two grandsons ran in it too. The news man said there were 26,000 runners if I didn't misunderstand!!!! Is that right? WOW! I knew there was a huge bunch but WOW!!!!
I was starting to give up on it. Enough that we went and had breakfast before it start. I was throwing in the towel and then it looked like the storm coming in a bit later was collapsing. So I ended up running it. Yes, 26K is correct, although I'm sure many may have decided not to attend because of the weather. Honestly, it is not one of my favored events because it is so crowded.
If you were still running when that wind got up so high today and got it for a tailwind you could break some records for speed I'd bet but if the wind was in you face it would have been a different story! It was horrible~had trouble even taking my Sunday afternoon nap! lol But, I prevailed!
My computer has crashed for now so until hubby gets time to fix it for me I'm be borrowing his and not getting any of my private emails so if any of you have written know that is the reason you haven't heard from me. Shant (no type-o) be long until I'm back in business! :)
My little girl is graduating kindergarten today. Let her listen to Alice Coopers Schools Out for the first time. She liked it.LOL Does that make me a bad influence? :)
Hope everyone has a blessed day.
That is hysterical! My youngest of four is going to his last day of high school today. I should send it to him! He will appreciate it more!!
LoL. I remember that song well when it came out.