Replies to This Discussion

Permalink Reply by Martin on October 7, 2018 at 14:43

  You need to hire a good oil & Gas lawyer. Plus how about location? That will probably effect the price a great deal.

• ▶ Reply

Permalink Reply by Max on October 9, 2018 at 2:29

Something else to remember about ROW's, you don't have to pay income tax on the money you receive. 

If you are planning to keep the property that the ROW is crossing and passing it to your heirs, you can choose to not pay any tax's now.  If you sell that property before you die, you will have to claim the ROW compensation you received and reduce your base. 

Jay is correct about the size and number of pipes.  Our attorney included language in our ROW agreement to limit both the size and number of pipes that could be placed in the ROW.

• ▶ Reply

Permalink Reply by James D on October 9, 2018 at 4:52

I have also started adding a clause that would terminate the ROW if it is not used for the intended purpose for a couple of years so I (or my heirs) may plant trees on it again and put it back into production.

• ▶ Reply

Permalink Reply by Martin on October 9, 2018 at 15:10

You need to add a clause requiring removal of the pipe(s) and another items installed.

• ▶ Reply

Permalink Reply by full name on October 11, 2018 at 9:16

You may want to make the removal your option.  I have re-leased terminated ROWs and sold the pipe in the ground for use by the next company.

• ▶ Reply

Permalink Reply by JHH on October 11, 2018 at 5:02

Max... we've always paid federal income tax on pipeline compensation... our accountant declares it as regular income.  Are you talking specifically about state or federal or both income taxes?  If I never sell the land before I die... I don't need to pay income taxes?  what happens after you die... do the heirs pay the taxes on the ROW compensation?   Thanks, very interesting.

• ▶ Reply

Permalink Reply by Bob Zimmerman on October 11, 2018 at 8:12

This topic was hashed out here several months ago, with the result that $500/rod is not out of the question. I have a relative near Carthage who has gotten that in recent years. More than once.

• ▶ Reply

Permalink Reply by Max on October 12, 2018 at 2:04

JHH, I read here on GHS that you could either pay federal tax's on compensation from a ROW (damages amounts are not subject to tax's), or choose not to pay them if you're planning on keeping the property and passing on to your heirs.  We did pay Louisiana tax's.  

When we filed that year, I asked our CPA about it and she said yes you could choose that route.  "If you keep the property until your death, and it's passed to your heirs, then they will get to reset the base value of the property at that time and owe no tax's."  "If you sell the property, or your estate sell's the property before it's passed to the heirs, then you can be subject to the federal tax's."  I think it was Dion who first mentioned this on GHS several years ago.

I'm sure that if I didn't ask my CPA about this, she would have counted the compensation as income and we would have payed unnecessary tax's.  MAX

• ▶ Reply

Permalink Reply by JHH on October 13, 2018 at 8:43

Thanks Max. My accountant (in Texas) has always declared the damages as income.  My interest is undivided.  So, selling would be very complicated.  Will check again.  Thanks

• ▶ Reply