An out of state landowner will have to pay La state taxes on that income via a non-resident La state tax form for sure. Depending on what other state you are talking about the income may also be taxable in the other state as well. However, if it is taxable in the other state there is usually a provision for a credit on that states taxes against what was paid in La. Clear as mud now? LOL
I will get a tax professional, but in the meantime, could you tell me if I only have to file the LA tax form for the LA Income amount, not all my income from every state since I have never been a resident of LA for any part of the year i.e. my job in my home state, and my rental income from another state not LA?
You are only taxed on the income whose source is in Louisiana. Similar to federal tax law: 2%/4%/6% graduated tax with exemptions and deductions (standard or itemized; if itemized, based on percentage of itemized on federal form).
If it is just the mineral rights, it is still ordinary income, unless the land and everything is sold.
The max federal tax rate is 35% and the state is 6%.
Here is a link to one of the other message boards where I posted info on how to determine what your taxes will be and if you need to make quarterly payments.
If you are seling all of it then it is capital gains, however if it is being "sold" with the understanding you can get the property back at some later time (e.g. buy it back cheaper then it was sold for or cheaper then someone else would pay) the income is still ordinary income.
In that case I would say it would be ordinary income. Capital gains tax brackets normally only apply if you retain no hold on the property or "substanstially similiar" property. Of course you should get someone to look at the contract and give you specific advice on this situation, but from what you have said it sounds like ordinary income to me.
1) O&G operator owns mineral lease for greater than 3 years
2) Lease has 1/6th royalty reservation by mineral owners
3) O&G operator assigns 25% ORRI to 3rd parties, less existing 1/6th royalty encumbrance on leases by mineral owners
4) O&G operator then assigns 75% n.r.i. lease to 3rd party O&G company, for cash consideration, reserving NO mineral interests of any kind (ORRI or WI) in the lease....only bonus consideration.
5) O&G operator is a resident of Texas, not LA.
Question A: Since the O&G operator retained no mineral interest after assigning/selling the lease to 3rd party O&G operator, does he get "capital gains" treatment? My understanding is that if he retains no interest in minerals, then it is of the same effect as a landowner/mineral owner selling his/her minerals outright rather than a lease.....which also would get "capital gains" treatment, correct?
Question B: Does the Texas residency still require payment of state income tax in LA, or is it based on Texas income tax rates, which is -0-??
As exciting as this is, we know that we have a responsibility to do this thing correctly. After all, we want the farm to remain a place where the family can gather for another 80 years and beyond. This site was born out of these desires. Before we started this site, googling "shale' brought up little information. Certainly nothing that was useful as we negotiated a lease. Read More