Will an out of state landowner owe Louisiana taxes on their lease bonus income? Will they also owe state tax in their home state?
Which state gets the taxes, please do not say BOTH!!!!

Tags: bonus, tax

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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

Kahy Morgan, Enrolled Agent
H&R Block Bossier Premium
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?
Here's the Louisiana Department of Revenue site:

http://www.rev.state.la.us/sections/individual/default.aspx

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).
A really dumb question... Can you tell me, on what schedule and line, I would enter the lease bonus on my federal taxes?
You will fill out Sch. E and that bottom line will flow through to line 17 on the front page of your 1040.
Kathy Morgan,

If a Lessee sells an O&G lease and reserves no ORRI (effectively sells all interests in the lease), is it still considered ordinary income or does it get cap gains status?

What is the max fed and state taxes under either outcome?
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.

http://www.gohaynesvilleshale.com/forum/topic/show?id=2117179%3ATop...

Hope that helps.
Kathy,

No ownership of surface, either....relinquishment of all interest.
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.
Kathy,

The "sale" requires a well to be drilled and production established in the Haynesville within 3 years......otherwise, it reverts back.
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.
Kathy,

Here is a good one for you:

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-??

Thanks,
Mattie

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