I received some minerals from my grandmother in Kingfisher County about twenty years ago. In 2015 I sold four acres and for tax purposes I needed to know the valuation of the minerals when I inherited them. Does anyone have an idea of how to find this information?
Valuation of minerals is going to be widely subjective, even more so than real estate due to the fact that there is not a publicly available database of historical transactions (similar to MLS in real estate).
If you are receiving income (production checks) on the property, it would be a little easier to nail down a reasonable number - based on Cash Flow analysis and adjustments for up-side (additional formations, unitizations, etc).
If they are not (actually, were not at the time of sale) producing any residual income, then there are several factors to consider along with several methods of approach.
The traditional definition of fair market value in several tax situations can be defined as, "The amount at which the property would change hands between a willing buyer and willing seller, when the former is not under any compulsion to buy, and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts."- International Assoc. of CPAs, Atty's, and Managers
Generally this is the amount used in calculating FMV in mineral transactions. If, for some reason, there are abnormal factors involving the sale of the minerals (ie: gifted, traded, family discount, etc.) and you wish to have some ballpark figures put together based on available information- I wouldn't mind helping you out with that. If you want something more formal, then we can also discuss that route.
You can PM me the property details if you would like, I can easily take a look at leasing activity, pooling terms/activity, production trends in the area, etc. and give you an idea of the amount of data available.
Thank you for the information. The legals to the minerals are Section 2, Township 15 North, Range 6 West.
Sheila,
There might be a value in the documents when her estate was probated. I would check the county records for her probate.
I have already sold the minerals in 2015. Our accountant is saying we owe state and federal taxes on the entire amount that I sold them for. She is stating since they were no producing at the time I inheirted them they had no value; therefore, I owe taxes on the entire amount.