Receipts from an interest in minerals or other natural resources
Sec. 33. (a) To the extent that a trustee accounts for receipts from
an interest in minerals or other natural resources under this section,
the trustee shall allocate them as follows:
(1) If received as nominal delay rental or nominal annual rent
on a lease, a receipt must be allocated to income.
(2) If received from a production payment, a receipt must be
allocated to income if and to the extent that the agreement
creating the production payment provides a factor for interest
or its equivalent. The balance must be allocated to principal.
(3) If an amount received as a royalty, shut-in-well payment,
take-or-pay payment, bonus, or delay rental is more than
nominal, ninety percent (90%) must be allocated to principal
and the balance to income.
(4) If an amount is received from a working interest or any
other interest not provided for in subdivision (1), (2), or (3),
ninety percent (90%) of the net amount received must be
allocated to principal and the balance to income.
(b) An amount received on account of an interest in water that is
renewable must be allocated to income. If the water is not renewable,
ninety percent (90%) of the amount must be allocated to principal
and the balance to income.
(c) This chapter applies whether or not a decedent or donor was
extracting minerals, water, or other natural resources before the
interest became subject to the trust.
(d) If a trust owns an interest in minerals, water, or other natural
resources on January 1, 2003, the trustee may allocate receipts from
the interest as provided in this chapter or in the manner used by the
trustee before January 1, 2003. If the trust acquires an interest in
minerals, water, or other natural resources after December 31, 2002,
the trustee shall allocate receipts from the interest as provided in this
chapter.
As added by P.L.84-2002, SEC.2.
Last modified: May 27, 2006