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Permalink Reply by Carol on September 23, 2008 at 3:18

Re "Bonus" - what we are being offered is a "paid-up" lease. The state gets actual bonuses, because they get a signing bonus, plus annual rental. When we get this money upfront for a 3-year lease, it's actually rent. The oil companies like to designate, because of their taxes, but if you don't get annual rental during the first 3 years, then what you are getting is simple rent. That is taxed differently. And if your acreage is of adequate size, or you farm or something like that, you may be able to use the rent as business income, assuming that you manage your property. Hint: H&R Block and other quick fix tax firms are NOT the answer to this problem. Regarding estimated taxes: you don't pay them in the first year. And if you have regular income where taxes are conveyed to the IRS by your employer, you may not have to pay estimated taxes. Check with both a good accountant and the IRS. And remember: the IRS clearly states that they are not responsible for the accuracy of their telephone information! Luck to you.

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