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It's Tax Season! Do Sellers Receive a 1099 for Mineral Sales?


In short: no.


Mineral and royalty acquisitions companies such as Tower Rock Oil & Gas do not send sellers a 1099-MISC for the sale of mineral rights. The exchange in question is akin to the sale of real estate or a car; there is no need for the purchasing entity to provide any sort of tax forms. In addition, 1099s concern contracted employees which are absolutely absent within the acquisition of minerals.


While no 1099-MISC is provided to sellers of mineral rights, sellers must report the sale on Form 4797 and Schedule D.


Here is some more information regarding 1099-MISC and Form 4797:


https://www.irs.gov/uac/about-form-1099misc


https://www.irs.gov/pub/irs-pdf/i1099s.pdf

https://www.irs.gov/pub/irs-pdf/i4797.pdf


Lastly, here is a helpful excerpt from page 2 under #5 of the IRS tax rules:

No reporting is required for the sale or exchange of an interest in the following types of property, provided the sale is not related to the sale or exchange of reportable real estate. An interest in surface or subsurface natural resources (for example, water, ores, or other natural deposits) or crops, whether or not such natural resources or crops are severed from the land. For this purpose, the terms "natural resources" and "crops" do not include standing timber.”


As always, Tower Rock is more than happy to address any concerns of our clients.


Contact us if you have any remaining questions this tax season!

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