Are mineral rights considered capital assets that would qualify for capital gains treatment if they were sold?
I can't seem to find a clear cut answer.
TIA
I can't seem to find a clear cut answer.
TIA
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Mineral rights
There are usually working interests, royalty interests, overriding royalty interests and 'fee' interests.
A fee interest owns both mineral rights and the land. He can sell the mineral rights and possibly retain a royalty or sell it outright.
It would be a capital asset just as the land itself would be.
If he owned the land and the mineral rights, then some allocation would be necessary to determine the basis.
If he bought and sold the mineral rights, then basis would be cost.
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