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18 posts
Most North Dakota mineral heirs live somewhere else — the Bakken boom turned homestead-era minerals into valuable assets held by families two or three generations removed from the state. This guide covers how out-of-state heirs establish ownership, North Dakota's 20-year abandonment statute, getting paid, and the keep-or-sell decision.
Read more →Most Texas mineral inheritances arrive with no paperwork: a parent passes, royalty checks stop or never started, and the family knows only that "there are minerals somewhere." This guide walks an heir through establishing ownership, getting paid, the tax picture, and deciding whether to keep or sell.
Read more →A charitable remainder trust (CRT) is an attractive vehicle for defraying capital-gains tax on appreciated mineral interests — except when the contribution generates unrelated business taxable income. Under IRC § 664(c)(2), a CRT with any UBTI in a year loses its tax-exempt status entirely and is taxed as a complex trust. Working interests routinely produce UBTI; royalty interests generally do not. This post walks through the qualification analysis at intake.
Read more →A conservation easement on land where the minerals have been severed to a third party requires a particular qualification analysis under IRC § 170(h)(5)(B)(i): the probability of surface mining must be "so remote as to be negligible." The Treas. Reg. § 1.170A-14(g)(4) surface-mining prohibition adds a separate gate. With Notice 2017-10 listing syndicated easements and the Hewitt / Oakbrook line of cases tightening the perpetuity standards, the intake workflow for a mineral-affected easement has become unforgiving. This post walks through the qualification analysis.
Read more →A defensible mineral-interest valuation depends as much on who performs it as on the numbers. The "qualified appraiser" definition under IRC § 170(f)(11)(E), USPAP Standards 9 and 10, and the credentialing bodies (AAPL CMM, ASA, SPEE) collectively define the standard the IRS expects. This post is the practitioner intake guide: how to qualify the appraiser, what independence rules apply, what the appraisal report must contain, and how to defend it on audit.
Read more →Mineral interests reported on Form 706, Schedule F (or Schedule G) require a defensible fair-market-value determination under Treas. Reg. § 20.2031-1(b). The valuation must reconcile two approaches — income (production forecast × forward strip, discounted) and comparable sales — against the IRS’s posture in IRM 4.48.6 (Mineral Asset Valuation Guide) and the consistent-basis regime under § 1014(f). This post is the methodology the appraiser is expected to apply and that the practitioner should be able to read critically.
Read more →IRC § 1014 grants a basis adjustment to fair market value at date of death (or the alternate valuation date) for property acquired from a decedent. For oil & gas mineral interests, several mineral-specific issues recur: how to establish DoD value defensibly, the income-in-respect-of-decedent exception for royalty earned-but-unpaid at death, the full community-property step-up under § 1014(b)(6), and the consistent-basis regime under § 1014(f). This post is the workflow.
Read more →After the Tax Cuts and Jobs Act of 2017 limited § 1031 to real property, the like-kind-exchange analysis for oil & gas mineral interests turned on a single question: is the interest "real property" for § 1031 purposes? For most royalty, NPRI, ORRI, and working interests, the answer under Treas. Reg. § 1.1031(a)-3 is yes — but production payments, term-overrides, and certain carved-out interests fall on the other side. This post is the practitioner workflow.
Read more →A qualified disclaimer under IRC § 2518 lets a beneficiary refuse an inheritance so it passes to the next-in-line as if the disclaimant had predeceased — without gift tax. For mineral estates the disclaimer tool is most often used when a surviving spouse or child does not want the operational, environmental, and tax-reporting burden of an oil & gas working interest, but the same mechanics apply to passive mineral and royalty interests. The pitfalls that disqualify a disclaimer are usually procedural, not substantive.
Read more →When mineral interests pass directly from a grandparent to a grandchild — by will, by trust, or by gift — the generation-skipping transfer (GST) tax can apply on top of the federal estate or gift tax. The GST regime under IRC chapter 13 is poorly understood relative to its size (a flat 40% on top of the wealth-transfer tax). For mineral estates the planning leverage is in (a) deciding whether to allocate GST exemption to a transfer at the time of the transfer, and (b) how to value the mineral interest for purposes of the allocation.
Read more →Since the 2015 Surface Transportation Act, an estate that files Form 706 must also issue Form 8971 to the IRS and a Schedule A to each beneficiary, locking the basis the beneficiary uses on later disposition to the value reported on the 706. For mineral estates this creates several procedural problems the general 8971 guidance does not address: partial mineral interests distributed to multiple heirs, after-discovered interests, interests still in suspense at distribution, and the interaction with depletion. This post is the workflow.
Read more →IRC § 6166 lets the estate of a decedent who owned an interest in a closely-held business pay the federal estate tax attributable to that business interest in installments over up to 14 years. For mineral estates the question is when an oil & gas working interest qualifies as an "interest in a closely-held business" and when it does not. Passive mineral and royalty interests almost never qualify; an active operating working interest can. This is the workflow.
Read more →Mineral interests are real property and pass under the law of the state where they are located, not the state of domicile. When the decedent owned minerals outside the home state, ancillary probate is usually the only vehicle that will clear title for the operator and the county. This guide covers triggers, vehicle selection, sequencing, and the recurring pitfalls that lengthen ancillary cases.
Read more →Transfer-on-death deeds let a mineral owner name a beneficiary who takes title automatically at death, bypassing probate entirely. Most oil-and-gas states allow them for mineral interests, but the drafting requirements vary and a single mistake can invalidate the deed.
Read more →When a mineral owner dies, their heirs generally inherit the minerals with a cost basis reset to fair market value on the date of death. For long-held minerals, the step-up is often the single largest tax benefit available — and requires documentation most families never think to gather in the moment.
Read more →When a mineral owner dies without a probated will, heirs frequently use an affidavit of heirship to establish title for leasing or sale purposes — at a fraction of the cost of probate. The affidavit is widely accepted but not unlimited; understanding when it works and when it does not is essential.
Read more →Unclear title is the most common obstacle in mineral rights transactions. This guide explains how probate works for mineral interests, how to cure title defects, and what to expect in each major producing state.
Read more →If you have inherited mineral rights, you may be unsure what they are, what they are worth, or what your options are. This guide walks you through everything heirs need to know.
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