Replies to This Discussion

Permalink Reply by Randy on July 31, 2008 at 16:37

It's considered "rent" income. The royalties are a different story.

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Permalink Reply by LeenyDeeny on July 31, 2008 at 5:49

I appreciate having concise instructions that go along with comments such as this. And all of y'all that provided names and addresses - thanks so much. I'd be googling all afternoon without your help.

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Permalink Reply by Johnson on July 31, 2008 at 5:50

That would help big land owners for sure....it might hurt 1/4 acre lot types.

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Permalink Reply by Assignat B2 on July 31, 2008 at 7:03

http://www.irs.gov/pub/irs-drop/rp-07-66.pdf

See pages 5-7 in the above link for the new federal income tax tables for 2008 income.

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Permalink Reply by waiting on July 31, 2008 at 8:22

This all goes back to my original point I made in my earlier post about how this will really benefit the mega money makers but hurt the lower income, including low income retirees.

The first post mentions the desire for a flat 25%.

Now, what if maw and paw, both retired and living off their social security have a few acres and received a bonus payment of say $25,000.

Under the flat tax proposal they get whacked at 25%, but under the present tax structure a closer look reveals that after their standard deduction and personal exemptions are taken, the taxable income would only be falling within the 10% table (joint couple) and only a fraction of the $25,000 would be taxed, not the whole thing !!!!!

The 25% flat proposal would definitely catch some lower income recipients off-guard.

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Permalink Reply by Joel on July 31, 2008 at 8:23

Um.... anyone for whom a 25% flat tax would be lower than regular income tax is in the group of high income earners that the majority of Congress would have a tough time helping in an election year... In simpler terms, to the majority party, people in that tax bracket are more seen as targets to soak, rather than people to help. So...good luck with that.

So, toungue in cheek, here's one way a Congressman or Senator might think such a letter might read ....

"Dear Congressman/Senator. Thanks to research in production techniques I had no personal role in, exploration activities that I didn't do myself, and higher gas prices that just happened, it turns out companies think there are megabucks worth of natural gas under my land and want to pay me to get access to it. I want you to cut my taxes to reward me for doing a deal whereby I get a big chunk of upfront cash from this happy set of circumstances at no risk to myself." ... yeah, they'll roll over to help - think of the good publicity in an election year. :)

As I say, good luck with that. Maybe some year with huge budget surpluses and a different sort of congressional makeup. Personally, I would suggest a very low profile.

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Permalink Reply by TCB DS3 on July 31, 2008 at 11:00

Joel, I am sorry you missed the point of my whole post. One point is thousands of landowners in these new o/g plays are going to get hit with higher than need be tax bills on a once-in-a-life time event. They are giving more value to the nation than the lease bonus compensates. The IRS code can be changed, by legislation, as is done all the time, and could be again in this one-time event to benefit landowners as the bill is benefitting the o/gs for the next 30-50 years. TCB DS3


give up more than the bonus income covers when

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Permalink Reply by Joel on July 31, 2008 at 16:50

Hi TCB,

Thanks for the comment. I don't follow you though....who is giving what to whom? Two parties sign an lease agreement - nobody has a gun to the other guy's head. Landowner gets a bonus check and an overall deal that they find acceptable or they don't do the deal. Where's the gift to the nation? It is hard to see how the nation is getting any gifts from these leasing deals - isn't a better description two parties agreeing on how to split 100% of the value and risks of getting any stuff under lessor's property? Lessor + Lessee = 100% - no third party gifts I can see. (Except for taxes....sure, state and fed each get their piece afterward but I would not call that a gift.)

I guess what I'm saying is, if you want to contact tax-and-spenders and ask them to cut you a tax break, that's your right but I suspect you'll need to be a lot more persuasive -talk their cost/benefit lingo: what specific changes would such a tax break cause, and would that be worth the drop in tax revenues? I guess I agree with Shaq's bottom line comment below - 'landowners currently have a massive incentive to sign already' - so how would reducing taxes bring more land into play? And sure, the value is more than just the bonus, but you do get royalties, no? And over time and if the play is as big as they say it is, the royalties to the landowners will prove far more valuable than the bonus.

I suspect it will be tough to get anyone in Washington to say 'poor Haynesville bonus recipients - what can I do to ease your pain' .... I think one could run the risk of appearing amazing greedy and if anything, spurring Congress to think in the opposite direction.

My 2 cents worth. Hope I'm wrong.

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Permalink Reply by Shaq on July 31, 2008 at 10:03

I really don't think this petition makes much sense. I suppose I can understand arguing that it should be capital gains instead of ordinary income. But beyond that, I think you're going to be very disappointed at how little traction this will get. What you need to realize is that almost all taxes will be going UP; thus, it's very unrealistic to expect to receive a tax break on "found" money.
It might make sense if you could argue that it would change landowner behavior in a way that was positive to this country's energy crisis. But that just doesn't seem to be the case. The bottom line is that landowners currently have a MASSIVE incentive to sign already.

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Permalink Reply by TCB DS3 on July 31, 2008 at 10:48

Shaq, this is not a petition. It is requesting language be added to a bill to help landowners in these plays with a one-time lower tax rate. If what you wrote was true CHK's CEO would not have even submitted his incentives--which he got. Have you read the list? Taxes may go up but legislation is written and added to every day to minimize the rate on parties who can show value to the nation. As for traction, time will tell, but the phone conversations I have had today with both staffers found them to be very open to learn more about what landowners need in this bill.

This is not about "found money" it is about receving value for value. Landowners are not getting full value for what they give up with just a bonus check. This proposed added legislation with its special provision in the IRS code for landowners would go a long way in balancing the ledger. TCB DS3

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Permalink Reply by Shaq on July 31, 2008 at 11:05

"If what you wrote was true CHK's CEO would not have even submitted his incentives"

I'm sorry, I don't understand what you are saying. Are you trying to equate corporate incentives with landowner incentives? If so, that's folly, IMO. CHK has to commit billions upon billions of dollars to try to produce NG - with no guaranteed outcome whatsoever. The landowner merely has to sign on the dotted line and wait - if NG flows, then great, if not then they were paid by CHK to wait.

"Landowners are not getting full value for what they give up with just a bonus check."

They aren't? Do you have a link to objective math proving that?

"Taxes may go up but legislation is written and added to every day to minimize the rate on parties who can show value to the nation."

I'm lucky in that my family has some shale land, but if I lived in, say, Missouri and was listening to your proposal to cut your taxes because you could "show value to the nation", I would tell you to sit and spin. It's just absurd on its face.

Answer me this - are you or are you not going to sign a lease with tax rates where they are now?

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Permalink Reply by TCB DS3 on July 31, 2008 at 11:31

We can agree to disagree and have very different points of view of how business and economies function and grow. All of us pay for flood disaster relief or war even if we live in a desert or along the Mississippi or want no war. It is call for the national good....We trade value for value as a nation for the common good of all.

Nothing was ever written about signing or not signing a lease that was never the point of my post. Of course, my family will sign when it works for us. Now, is the time to plan and to protect your profits just as CHK and other o/gs are doing.

Do not forget that if you add up all landowner the bonus lease dollars you have a multi-billion dollar economy at work and that kind of money can get a lot accomplished.

I believe the fed tax rate should be amended for this one time special event for most landowners in our country. Therefore, I am choosing to do what I can to change it.

Thanks for reading. TCB DS3

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