58-9-411. Minerals, water and other natural resources.
58-9-411
58-9-411. Minerals, water and other naturalresources.(a) To the extent that a trustee accounts for receipts from aninterest inminerals or other natural resources pursuant to this section, the trustee shallallocatethem as follows:
(1) If received as nominal delay rental or nominal annual rent on alease, a receipt must be allocated to income.
(2) If received from a production payment, a receipt must be allocatedto income if and to the extent that the agreement creating the productionpaymentprovides a factor for interest or its equivalent. The balance must beallocated toprincipal.
(3) If an amount received as a royalty, shut-in-well payment, take-or-paypayment, bonus, or delay rental is more than nominal,15 percent must beallocated to principal and the balance to income.
(4) If an amount is received from a working interest or any otherinterest not provided for in subsection (1), (2), or (3),15 percent of the netamountreceived must be allocated to principal and the balance to income.
(b) An amount received on account of an interest in water that isrenewable must be allocated to income. If the water is not renewable, 90percent of theamount must be allocated to principal and the balance to income.
(c) This act applies whether or not a decedent or donor was extractingminerals, water, or other natural resources before the interest became subjectto thetrust.
(d) If a trust owns an interest in minerals, water, or other naturalresourceson the effective date of this act, the trustee may allocate receipts fromtheinterest as provided in this act or in the manner used by the trustee beforetheeffective date of this act. If the trust acquires an interest in minerals,water, or other natural resources after the effective date of this act, thetrustee shallallocate receipts from the interest as provided in this act.
History: L. 2000, ch. 61, § 20;L. 2003, ch. 38, § 1; July 1.