Inhheritance Tax?

I talked to a freind in PA. yesterday that told me that his elderly mother had passed away last May . He told me that the state (PA) had put a hold on her properties and wanted him to hire a geologist to appraise the gas and oil under her properies so he could pay the inheritance on the appraised amount. He told me that his attorny told him that there are alot of properties in PA in a similar postion and everyone is waiting for someone to sue the state over the practice so that party can bear the expense then the rest of the parties will file using the prior case.

Has anyone heard anything about this?

I'am still amazed how important things like this dont make it into are local newspapers at all

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Permalink Reply by Billy Park Whyde on April 1, 2012 at 2:52pm

Thankee for the answer .

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on April 1, 2012 at 3:35pm

Les, I called the Dept. of Revenue and talked with a chief attorney and was told that the inheritance tax can be paid based on the 'clean and green' amount if the property is in such a program.   it is even in the booklet ...if 'clean and green'.   yet the executor of my dad's estate wanted to pay the higher tax and the tax was based on only the land value at market value of that time (2009).   Now this all has to do whether the estate is under the  IRS tax table exemption amount  (I suppose you call them the Bush tax rates)...as the confusion was that if the inheritance tax wasn't required to be paid to the IRS or no form required then what exactly was to be filed with Pa. regarding inheritance tax as they expect an IRS form also with the filing.   You can message me and I will tell you the names of the people I spoke with if you would like.

Billy,   ...There is some info at this discussion related to inheritance tax..

http://gomarcellusshale.com/forum/topics/lots-of-talk-about-tax-and...

Permalink Reply by craig on April 1, 2012 at 3:50pm

VG, Just talked to my brother who has dealt with this on one of his properties. You  are right about the clean and green basis for Pa. state inheritance tax purposes, however you will also have to add in the future value of royalties as well. They have tables and you will pay it eventually, or your heirs will.

That's what his attorney said....they split up the property in a LP, i beleive, with the family members to help keep the tax amount down for each individual.

Anyone can correct me if i'm wrong.

Permalink Reply by Billy Park Whyde on April 1, 2012 at 5:42pm

Correct me if I am wrong on this but are you saying the worst anti fracker in the world that would die at the fence line holding off a landsman would have the property valued at a speculative value upon possible oil or gas, even if the will deeded the property to a heir with a no drilling clause? 

WOW now that would be about enough to really get a anti screaming! 

Permalink Reply by Jeff on April 1, 2012 at 8:40pm
Craig, are these tables for future royalties on line?
Permalink Reply by rmc on April 2, 2012 at 3:20am

Hey folks its great to plan for the future and get these things taken care of but just think of all the older farming familys that signed poor leases a few years ago that wont form LLC's or anything else and end up losing the farm over these Inhheritance tax issues and other issues we dont even know about  yet.

Eveyone is complaining about how the landmen robbed them or decieved them into signing bad leases but no one seems to be able to see these issues coming. The great fleecing  of the Amercian Farmers just watch and see how many of our rural acres and mineral acres end up belonging to large corporations over the next 10 to 15 years.

Just think we have the power to change this things now all we have to do as a collective body is vote our conscience loudly

Permalink Reply by Billy Park Whyde on April 2, 2012 at 3:26am

rmc I hope that some of the farmer landowners go into politics as a way of protecting themselves along with others!

Jim ShoosPermalink Reply by Jim Shoos on April 2, 2012 at 4:34am

I make no judgment as to the fairness of inheritance tax laws but I will say that they have been around forever.  Nobody ever worries about them if they don't have squat to pass to their heirs.  Thanks to the proliferation of the Marcellus and Utica Shale's what was previously deemed to have minimal value suddenly has significant value. 

It is vogue to identify yourself with the 99% and gripe that those rich guys aren't paying their share, but when you find yourself suddenly qualifying as the 1% due to the fact that your 30 acre farm which hasn't produced much in the way of income over the past 100 years is instantly worth a small fortune due to oil and gas income, the shoe suddenly shifts to the other foot.  Pay up... it is what you expected of the "other guy". 

Welcome to the 1%.

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on April 2, 2012 at 4:04pm

Hi Jim,

If all did get a bonus in the family then perhaps that would be the case...but some do not even see a penny of it as the original owners spend it...so if someone inherits the leased property and there isn't royalties established yet ...and according to this discussion we are concerned that Pa. may want inheritance tax paid on the 'expected' royalties (which are still speculative)...then the concern is that the beneficiaries may even lose the farm persay if they cannot afford the taxes on the property at a higher tax rate because of the expected royalties.

I really think that the state of Pa. shouldn't be taxing what isn't yet...and the concern also is that taxing on not knowing the future of the royalties wouldn't make much sense....esp. if the well was capped, etc.   It is a one time payout for the inheritance tax based on land/house market value using the tax code tables for beneficiaries...but if they choose to use the tax amount on clean and green status (that is if the property is in C & G) then they are subject to a roll back if the status changes over up to seven years.  There is a big difference in market value tax and clean and green tax....big difference.

Jim ShoosPermalink Reply by Jim Shoos on April 3, 2012 at 3:07am

Well, if Mom, Dad or weird Uncle Al got the lease bonus money and you inherited the land then I can't see where the State would have any claim whatsoever to any inheritance tax strictly only the bonus proceeds, unless you also inherited cash from your relative.  There is no way in heck that the State could claim any value on currently non productive land in terms of assessing what future royalties might be... the State might, however, take note of what lease bonuses are being paid in an area, however, the fact remains that a landowner could choose not to lease and thus even potential bonus amounts are speculative and may not materialize at all.  I would go to court any day of the week against the PA Dept of Revenue if they tried to pull that crap. 

We have leases many people that had "clean and green" status.  First off, simply entering into a lease does not alter your clean and green status.  If a portion of your surface were to be utilized for construction of a well pad or a compressor site then "that, and only that portion" of your land would fall out of the clean and green program.  We had a landowner with a road and a well pad that was constructed (ten acres in all) and his 7 year rollback was only about $700.00 which I personally don't consider a big deal... especially when you consider we paid him $50,000 for surface use on that road and pad.

Permalink Reply by craig on April 2, 2012 at 4:03am

Not that I know of Jeff. His attorney came up with a current value of the gas/etc, as well as a volume over the life of the well, then they used some sort of table to get the royalties over the years. I don't know all the particulars, but a good accountant and attorney should.

I'll see if i can get more info, however my family is having major health issues right now so i may not have the time.

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on April 2, 2012 at 4:57am

Craig,  perhaps that is why the executor didn't want to use the 'clean and green' rate at the time in 2009 as there was no unit or well but only a lease , not being sure if there was a change to the tax status that there would be a penalty tax to pay of the difference.   Not sure they could charge that back to include royalties though if the ground wasn't producing any.   I specifically talked with the county about such and was told that they could not tax the property based on speculative future royalties...even at 'clean and green' status.   However the executor went ahead and paid taxes on market value at the time for inheritance tax....I tell you that is many thousands compared to the clean and green rate which would have been almost under a thousand.   I argued about it as why pay thousands of dollars at a higher rate when they would accept clean and green rate?   Chances are someone isn't going to sell their property and change the clean and green status when they are expecting royalties?  I mean since that was paid it has been 3 years of the 7 that the state uses if there is a roll-back.  (and I am talking a difference of a15k verses less than 1k).  I sure wish they would have listened to me about paying the lower tax rate.

  Now someone who understands the need for the clean and green status to stay on those properties in Pa that qualify...knows exactly why there is some problems in this area.  Also I felt the clause in the contract where the oil company would pay any taxes for any interruption of the clean and green should have included 'inheritance taxes' as well as for at the time it was still in dispute as to whether drilling on the property would create a problem with clean and green status.  Since then Senate bill 298 in Pa. has passed.

Billy, is the property you speak of have a 'clean and green' tax status?

hey, just found this link of info...

http://saunderslawllc.com/client-advisory/pa-house-addresses-incons...

http://www.pagasleaseattorney.com/clean-and-green.html

 

 

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