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Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I want to know if timber and mineral rights can be shown on

Resolved Question:

I want to know if timber and mineral rights can be shown on form 706 so that a beneficiary can get a stepped up basis.
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.



Hi and welcome to Just Answer!
.Timber rights are the ownership of the marketable trees on a particular property.
Similarly - mineral rights ("mineral interest") - are the ownership of the marketable minerals that are extracted from the land.
Both are parts of an estate in real property. The complete private ownership is known as a "fee simple estate". The property owner may sell or transfer partial rights known as "surface rights" and "subsurface rights".
For tax purposes - partial rights to a real property are treated the same way as a fee simple estate - they may be sold, the seller will recognize a capital gain on the sale, and - yes - the beneficiary may get a stepped up basis in inherited timber and mineral rights.
Let me know if you need any help.


Well, you have confirmed what I thought, but since these are fairly large numbers I figured that a second opinion is certainly worth any fee. It sure sounds right to me.

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