Patricia V., Thanks for your response. I’m still concerned about the last item listed under “Exceptions” for the 1099-S that says:
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.
Why would the IRS include a caveat like this if these mineral right interests were taxable? My great grandfather sold this property in 1919, but retained a portion of the mineral rights. So this sale was not related to the sale of property. Reporting this like the sale of a second home or stock is like saying that it is real property. Rights are rights, nothing more. They become taxable assets once they reach the surface. That’s why mineral right owners lease land containing minerals and pay taxes on their portion of these minerals once they are mined. Please give me additional insight that I don’ currently have. Thanks!
David
