sale of mineral rights and net investment income

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  • taxtimeagain
    Member
    • Feb 2008
    • 39
    #1

    sale of mineral rights and net investment income

    I have a client who sold his mineral rights on land he had purchased about 20 years ago. At the time of purchase no value was given to the mineral rights. According to my research that would give a 0 basis correct? While computing the taxes on this sale, the client will also be liable for the net investment tax? Thank you for your help
    Tags: None
    • Burke
      Senior Member
      • Jan 2008
      • 7068
      #2
      Has the TP been receiving royalties on those mineral rights in previous years? If so, you must account for depletion. Or was it just determined that the subsurface had such minerals available? And does the contract just sell the rights, and not the underlying land?

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        • taxtimeagain
          Member
          • Feb 2008
          • 39
          #3
          The contract just sells the rights, not the land. The property has been receiving royalties.

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