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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
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Experience:  Extensive Experience with Tax, Financial & Estate Issues
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my family leased some land in tyler county for natural gas

Resolved Question:

my family leased some land in tyler county for natural gas one time payment was
$10,000.00 .my gross wages were 28,500.00.i also draw 19280.00
from ohio workers compensation .my total itemized deductions were 23,460.00.will i have to pay capital gains on the 10,000.00
Submitted: 4 years ago.
Category: Tax
Expert:  Stephen G. replied 4 years ago.

Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Stephen E. Grizey :

Was it actually a lease? Rental income is ordinary income reportable on Schedule E (Part 1), not capital gains.


yes it was a 1 time payment unless they find natural gas on the property

Stephen E. Grizey :

Upfront bonus payments for oil & gas property leases are considered "Advance Royalties" and as stated above are reported on Schedule E as Rent & Royalty income. No depletion deduction is allowed & the income is taxable in the year received.

Stephen E. Grizey :

You would be entitled to any expenses related to the property or the lease; real estate taxes, legal expense or anything else directly related to the land or the lease.

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