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GiftLaw Pro Home   >  Chapter 4 - Specific Property Gifts  >  4.7 Land and Buildings  >  4.7.7 Oil, Gas and Mineral Interests  >  Basic Quiz

Basic Quiz - 4.7.7 Oil, Gas and Mineral Interests

1. America is incredibly dependent on foreign nations for its energy needs and is far away from becoming energy independent.
           
2. Because the production of mineral interests, such as those for oil, gas or coal, can be quite complex, the owner will typically lease the right to extract minerals to an operator.
           
3. The mineral owner's rights to royalties and the operator working interests may not be divided.
           
4. If a donor owns land with oil or gas under the surface, the donor can benefit from a deduction with a gift of the land alone to charity.
           
5. If a donor has already leased the property and is earning a royalty interest, the best gift option would be for the donor to receive the royalty income into their taxable income and contribute it to charity for a charitable deduction.
           
6. With a life estate, the extraction of the minerals has potential impact on the charitable remainder recipient. Therefore, production will "deplete" to some extent the mineral interests, so there must be a shared payment of this amount.
           
7. With a life estate, the standard allocation of the income from the mineral interest is 60% for the life estate income recipient and 40% for the charitable remainder beneficiary.
           
8. There is no need for a donor to obtain a qualified appraisal when it comes to any gift involving mineral interests.
           
9. Because royalties are capital gain income, all charitable remainder trust payouts from a trust funded with royalties will have the character of capital gain income.
           
10. A royalty interest that is a working interest is considered an active interest that will produce UBIT.