pad fee

If you have a well pad on your nproperty and have recieved a pad fee how are you treating it on your taxes

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0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on September 15, 2014 at 7:54pm

Patrick,

       The company will send you a 1099 Form which will show the type of income. The bonus was marked as Rents & Royalties, which is what the royalties will be as well. I would think a Spud Fee would fall under Rents & Royalties as well. Follow the guidance on the back of the 1099 Form.

You could call the producer and ask how they are going to code the 1099.

Permalink Reply by patrick on September 16, 2014 at 9:11am

Thanks , that is what I was looking for

Permalink Reply by John on September 15, 2014 at 8:32pm
20 acres would be a very large pad site. Ours was 8 acres I believe. The way our lease read it was 30,000 for 7 acres and an amount ( can't remember what) for every acre over 7. Insure each lease is a. It different
Permalink Reply by INVICTUS on September 16, 2014 at 6:00pm

Damages. Make certain that the check you receive specifically states this.

Damages are a nontaxable event RE: income; however it will reduce the basis in the property.

If you treat it as ordinary income, it won't affect your basis.

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