Tax on Unclaimed royalties from Texas

It seems that I have gotten some money from Texas Unclaimed for past royalty payments due to my mother, now deceased. I understand ( have been told) that Texas will not send me a 1099. How do I go about paying IRS taxes on it and do I have to?.  Some say yes, some say no.

Texas unclaimed just sent me a check with no production amounts, dates, etc. However, the initial paperwork did allow for identification of the producing company.  The amount of money is a nice Christmas gift, but the taxes on it, if payable, are not to be sneezed at either and I want to provide for them from the get-go rather than be a unhappy camper on down the line.

 

This is indirectly associated with the Haynesville, and I have gotten excellent advice from you folks in the past, particularily regarding some inherited stuff in Shelby County, which some of you might remember. I am still working on that little problem.

 

John Starke

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landownerPermalink Reply by benny688 on December 23, 2010 at 14:32

Yes, you have to pay federal taxes on this in the year that you actually received the money whether you got a 1099 or not. The alternative is to risk penalties and unusually high interest if you aren't honest about it. 

 

If you got paid before 1/1/10 you need to file a corrected 1040.

 

GLTA

Permalink Reply by John Starke on December 23, 2010 at 17:17

That is exactly what I figured. I just cannot figure out why the state does not issue me a 1099.  Guess I will just list it under misc, other income. On the other hand it should be under the royalty column so I can get my depreciation deduction. Thanks for the response anyway.

The good side is that all the revenue is 2010.

Permalink Reply by Oklahomachic on December 24, 2010 at 2:06
I am sure you are aware of this already, I got hit hard when my father passed away. I did not file and got a nice letter from the IRS.  I didn't know either.  Merry Christmas.

landownerPermalink Reply by adubu on December 24, 2010 at 6:05
shirleysewell-- you must not have filed estate tax return. If the royalty was transferred to you in the will you should have notified the operator of change in ownership then the monthly royalty checks would have been sent in your name and 1099 would have been sent to you. If the royalty was still in your father name then his estate received the 1099 and a tax return should have been filed for the estate until the esate was finally closed out

landownerPermalink Reply by adubu on December 24, 2010 at 5:59
John Starke---- You should check with unclaimed property of Texas since the operator of the well had no SS # they may have withheld income taxes on the royalty payment just like if they do if they do not have a signed DO they must withhold federal income tax if no SS#. Or they may have to withhold Federal income Tax and send to IRS prior to sending remainder to the unclaimed property of Texas even if they have the SS# ;for I'm sure the IRS would not allow any revenue to be taken from them. I'm sure Texas got the severence Tax on it out.  I don't know if this is fact but may be. If state gives you no 1099 you can bet taxes have been withheld and sent to IRS. Personally if you have no 1099-- then Merry Christmas I would not claim it on my return for you may be paying twice. Let them find on audit if you owe anything.

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