Your basis in the property is the fair market value as of date of death plus any repairs you did to the property.
According to Internal Revenue Code Section 1014, the tax basis of inherited property is generally the fair market value on the date of death, or the alternate valuation date if that value was used on the decedent's estate tax return.
Unlike surface rights of which most of us are more familiar, inheriting mineral rights can present issues which are more often off the beaten path.
You want to ask the tax attorney if a "Fair Market Value" was assigned the the oil and gas rights you've inherited.
If the rights are acquired through inheritance, the basis is “stepped up” to the fair market value at the time the decedent dies. A qualified appraisal is needed to establish cost basis upon inheritance or if the rights are transferred to another entity.
Each individual tax treatment depends on time frame and use of the property by the recipient , You might find it beneficial to consult a tax profession proficient in minerals rights to ensure your best benefits.in tax reporting.
