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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13110
Experience:  15years with H & R Block. Divisional leader, Instructor
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My husband inherited some mineral rights in Oklahoma from his

Customer Question

My husband inherited some mineral rights in Oklahoma from his sister. We sold those rights and received a 1099-misc for the money we received. I do not know how to put this income on my taxx return without having to pay taxes on it.
Submitted: 7 years ago.
Category: Tax
Expert:  Robin D. replied 7 years ago.


To compute the gain on this sell, or the loss, you must first know what your BASIS in the property is. Generally your basis is the purchase price but when you acquire propery in other ways besides purchase then you must look at different factors.


Your basis in property you inherit from a decedent is generally one of the following:

The FMV of the property at the date of the individual's death.

The FMV on the alternate valuation date if the personal representative for the estate chooses to use alternate valuation.

The value under the special-use valuation method for real property used in farming or a closely held business if chosen for estate tax purposes. This method is discussed later.

The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified conservation easement. For information on a qualified conservation easement, see the instructions to Form 706.


If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes.


Now, when you show this sale you will have a basis to begin with against the sales price.


I hope this is helpful to you, but, please let me know if you need more clarification on this subject.

Robin D. and 4 other Tax Specialists are ready to help you
Customer: replied 7 years ago.

Since this is an inhertiance and we had no value and we were told by the energy company that this is what the mineral rights was worth what tax form would I use on my tax return to report this income?

Expert:  Robin D. replied 7 years ago.

Hello Shirley,

You can take the appraisal of the energy company as the correct basis provided this all happen relatively close in time to each other (the sale and the inheritance).

This in effect would make your sale price and your basis the same and thus no gain equaling no tax.

You will enter this information on the Schedule D as a sale.



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