Mineral rights sale on inherited land 1099-S

[Edit for TY24 - enter the mineral rights as sale of business property on Form 4797 instead.  4/11/2025 | 5:51 PST]

 

Your 1099-S will be entered as a sale under investments.  The steps vary depending on the program and version but you can find what you need since  Personal income covers Investment Income which has subsections and we need to get to Other to enter the sale. You will end with Land (other investment purposes).

 

For your online version, these steps will help get you there:

Answer Yes on the Did you have investment income in 2023? screen, then Continue.

1. If you land on the Your investments and savings screen, select Add Investments.
2. On the next screen, select Enter a different way.
3. On the OK, let's start with one investment type screen, select Other (land, second homes, personal items), then Continue.
4. On the Tell us more about this sale screen, enter the name of the person or institution that brokered the sale.
5. On the next screen, select Land from the first dropdown menu, then enter the rest of the info for your sale, and Continue.

 

Once you reach the screen and mark inherit, you need to be careful. Things are a little trickier for you. 

The description can be simply mineral rights. These qualify for capital gains treatment instead of ordinary income.

Date sold - enter the date on the 1099-S

Proceeds -with so many inheritors, did each get their own form 1099-S as they should have or did one person get and subdivide by appropriately sending 1099-S forms to the others with their share? You need to enter YOUR share of the proceeds only.

FMV when owner passed - enter your portion of the value - for example, the land was worth $130,000 upon passing divide by 13 inheritors and your basis would be $10,000. Figure out your basis and enter it here.

Continue

If there were selling fees, commissions paid, select paid expenses and add those. Otherwise, select None and continue. You may need to ask the person who sold the land.

 

This has nothing to do with itemizing deductions so unless you have something unusual this year, you are allowed to take the standard deduction if that is higher and better for you.

 

Thank you for your service.

 

 

 

 

Thank you so very much for your time and effort and responding! I will go through this process this weekend and post another reply. We are very grateful!

Hi Amy!

Well, I was able to follow your directions and find what boxes to fill! 😁

 

In reference to the BASIS - I am presuming that since the Mineral Rights were sold as soon as we were notified of the inheritance, that the company that bought them from us sold them at FMV at that time.  That being what I believe to be the case, I entered the same amount for the basis as the amount for the sale. 

 

My questions are:

 

1. If we sold the rights to a West Virginia company, and there isn't any gain (bought and sold at FMV) do I need to file a West Virginia State Tax form, OR since I live in Texas (Since 2010) I do not need to file anything with West Virginia?

 

2. If my Basis is incorrect and there was a gain (however minimal) would I need to file a WV State Tax form?

 

Thank you so much for your assistance!

 

Roger & Rosemary

 

 

Yes, you must file a West Virginia (WV) tax return.

 

1. & 2. If we sold the rights to a West Virginia company, and there isn't any gain (bought and sold at FMV) do I need to file a West Virginia State Tax form, OR since I live in Texas (Since 2010) I do not need to file anything with West Virginia?

• Yes, you must file the WV tax return to show you did have a cost basis which proves you have no tax liability for WV. This is the same answer to your second question.  The only facts they have is the income until your return is filed.

@sanantoniorocks 

Thank you very much for your assistance!