I inherited mineral rights in WV in 2020 under property my great grandfather sold in 1919. I have the bill of sale for the land which stated that he retained a portion of the mineral rights. I sold these rights in 2023. The purchasing company sent me a 1099-S for the sale. I hired an attorney to give me a cost basis for these mineral rights so I could determine my capital gain. I've read the instruction for Form 1099-S (1/2022) and have found that there is a filing exception for mineral right sales that are not related to the sale or exchange of reportable real estate.
Exceptions
"No reporting is required for the sale or exchange of an interest in the following types of property, provided the sale is not related to the sale or exchange of reportable real estate.
- An interest in surface or subsurface natural resources (for example, water, ores, or other natural deposits) or crops, whether or not such natural resources or crops are severed from the land. For this purpose, the terms "natural resources" and "crops" do not include standing timber."
WV taxes were withheld at the time of sale and I've just completed my non-resident WV tax forms.
Am I reading this Instruction correctly or do I owe federal taxes on the sale of these mineral rights?
Thanks very much!
David Stamm
