That seems realistic... Did a calculator at 10 mmcfd w/a 640ac. unit and current market rate for gas based on that acreage = abt.3 grand per mo. @ 18%.
$300.00 is really good per acre/ mo. and doubt very many single wells produce more than $500.00 ac./mo....Higher figures are most likely multiple wellsHope to find out in a month or so myself
Do you know the name of the unit? Just one well producing now?
I have 21 acres just a few miles from the town of Cherry Flats.
The way I understand it, Federal taxes on Leases (bonus money) are figured as ordinary income so the taxes can be quite high. On royalties you are allowed to take 15% off the top before taxes.
That's the easy quick version of how it's taxed.
I'm not an Tax preparer but , Upfront money is treated as Rental/Lease Income, on line 17 form 1040 I believe. The same line as partnerships, royalties, etc...so royalties must be treated the same.
What schedule you use to arrive at the number to enter on line 17 I don't remember.
Don't know anything about the PA taxes but here is what the IRS is going to hit you for. This is a copy&paste from another post I made a couple weeks ago.
Lease bonus money is taxed as unearned (passive) income and will be in whatever tax bracket your AGI fits in. It is not all taxed at 42%. I believe Federal tax brackets are as follows:
$0-$16,750 = 10%
$16,750-$68,000 = 15%
$68,000-$137,300 = 25%
$137,300-$209,250 = 28%
$209,250-$373,650 = 33%
$373,650+ = 35%
If your income this year is approximately the same as last year (aside from the lease payment) then add your lease bonus payment to your AGI from last year to get a good estimate of your tax liability.
You also need to consider your state tax liability. In Ohio, tax rates are from 4.327% to 6.24% depending on your income.
Royalty income has a tax advantage in that you get a 15% depletion deduction so you only pay taxes on 85% of the royalty money.
If you get any sizeable lease payment you should hire a good tax adviser to figure out how to keep as much of it as possible.
At one of the landowner group meetings we had a tax expert come speak to us about the tax liability of a paid up oil & gas lease. It was well worth listening to.