Replies to This Discussion

landownerPermalink Reply by Tim on July 30, 2008 at 12:16

No bonus money is an incentive to get you to lease.

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Permalink Reply by jeanne on July 30, 2008 at 13:19

I am new to this. Can you explain what the difference is. Is it how you show it on your tax return and if so, which is better?

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Permalink Reply by randy on July 30, 2008 at 13:39

they are the same thing , no difference on taxes,, but you have a point you will need a tax person for that question,,, my question is will the upfront money [bonus money] be payed back before royalty checks are recived,,, i think it will be called operating expense in the contracts...and they will be payed back [oil companys do not give away money]

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Permalink Reply by BirdDawg, plain ole' idiot on July 30, 2008 at 13:46

Randy,
I know you are a very capable landman. But please believe me when I say that no bonus money is held back while the companies recoup their expenses. Lease bonus money has no relation whatsoever to the operating expenses of the well. I know what I am talking about because I own both working interst in wells and royalty interset in wells, and have for many years.

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Oil & Gas ProPermalink Reply by Randy on July 30, 2008 at 14:36

Different people, I'm "that" Randy.

Bonus is reported on a 1099 at the end of the year, in box 2, the "Rent" box.

It is considered regular income.

Oh and yes it is NOT operating expense.

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Permalink Reply by Snake Stewart on July 30, 2008 at 18:04

Little "r" Randy's rig looks bigger then yours and its got fire shooting out the end of it.

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Permalink Reply by BirdDawg, plain ole' idiot on July 31, 2008 at 0:16

Randy (the landman),
Wow, that worried me for a minute.

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Permalink Reply by BirdDawg, plain ole' idiot on July 30, 2008 at 13:36

I think lease bonus money is payed by an o & g company as a right to "own your working interest portion" of your mineral interest. No portion of this bonus money is held out as any expenses.
Bonus money is in NO WAY A PORTION OF OPERATING EXPENSE against the wells drilled in any units covered by the lease.

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Permalink Reply by BirdDawg, plain ole' idiot on July 30, 2008 at 13:51

Lease bonus money is paid to you to lease your mineral interest. After that you receive your full portion of the production, less any true expenses, based on your lease. But no lease provides for the company to recoop the lease bonus money that they payed for the lease bonuses.

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Permalink Reply by randy on July 30, 2008 at 14:18

thank you,, i've just been hearing this going around and wanted to be sure

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