Valuation Analysis of unproven gas/oil minerals

Our new CPA has a great program for structuring gas/oil assets BEFORE they are leased/sold that REDUCES the taxes greatly! In order to best use the strategy we need to establish the value of the gas/oil in the Utica/Point Pleasant Formations which is what we are going to lease. I see there is a computer program used since the 1990's, not sure how updated it is...and I see some mineral  assessors advertising. Has anyone had any experience in getting their unproven minerals valuated? Please share any details. Thank you!

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Permalink Reply by Michael Walentosky on March 26, 2014 at 6:33am

Paid a fortune to the IRS last year on bonus payment.  Could this tax amount be reduced with this program?

Permalink Reply by al raptoria on March 26, 2014 at 8:38am

Sorry, it has to be set up BEFORE SIGNING A LEASE as it requires setting up a special type of entity we'd never heard of before, (and we'd sat through many a seminar by local CPAs and Financial Planners over the past four years while waiting for a lease offer). That special entity serves as a legal intermediary and one of its purposes is to receive Bonus and Royalty money at a deferred tax rate while investing whatever part of it you assign to make more money than the EVENTUAL tax tab (it's what wealthy folks have been doing for decades, so why not us too!) - found the CPA on THIS site by searching "CPA" and read his "white paper" postings on this site, then googled him, read more about him, then emailed him directly at his business. He's the real deal. He's based in Maryland and has several very happy clients in the Cleveland area who are trying to get him to come do a seminar for their landowners group. He is a Tax Expert /CPA/Financial Planner. I'm sorry you already signed, got your bonus and paid full tax on it. Seems everybody is having their own unique trials and errors and successes with this new "black gold rush." We've had four years of missteps along the way, but maybe our delays and disappointments are going to pay off this way - when we get a lease! Best to you Michael. May what "you have left" bring you all that you need.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on March 26, 2014 at 9:00am

"(it's what wealthy folks have been doing for decades, so why not us too!)"

Whenever I read something like this my b*!!sh!t meter hits its maximum threshold. 

Permalink Reply by al raptoria on March 26, 2014 at 9:35am

I understand skepticism - as I am too - which is why I thoroughly CHECKED IT OUT first. AND ran it past our esteemed Attorney who has represented us well in corporate and personal legal issues for years, AND am running it past our Mineral Rights Attorney too.

There is need for prudent investigation of EVERY aspect of this industry before aligning with it in any way. We have dedicated ourselves to intelligent and thorough investigations for four years. While there is always more to learn, it helps to keep our natural skepticism in check, as to lead with only a buffalo-chip meter will keep us in the darkness of ignorance which is way too costly when dealing with this industry.

Why not take the time to investigate what I am speaking of, to assuage your instant reactions - or to verify them with actual knowledge? Knee-jerk reactionism is hard on the knees and the jerk. (Speaking from experience here.)

The strategies espoused by the CPA, who has a 30 year track record of representing Fortune 500 companies are now available to those of us who face "instant wealth" before those who like Mr. Walentosky (above) and hundreds of others on this and other forums are likely misled by their Mom and Pop Tax preparers, or even worse, by the cookie cutter (H&R Blockhead) companies who hire throngs of "home trained un-certified accountants " during "tax season" who couldn't possibly comprehend the outrageously complicated tax laws that benefit clientele (the super rich corporations) that THEY are unlikely to ever see stroll in their doors with shoeboxes full of receipts.

MY bull-puckey meter goes off when I see what the undereducated "experts" are misleading their clients to pay taxes on!

Best to you and your way-back machine bull-dung meter.

Permalink Reply by al raptoria on March 26, 2014 at 9:36am

Now, will somebody please post a response to the actual reason I started this thread? How do I get a legitimate Valuation Analysis of unproven minerals?

Thank you.

Permalink Reply by george m vietze on March 26, 2014 at 10:34am

This company has many years experience with valuing mineral rights.

http://www.gustavson.com/mining/mineral-appraisal/

Permalink Reply by al raptoria on March 26, 2014 at 12:11pm

Thanks George, I ran across that name too and an association of their peers all doing Valuation Analysis...Will give them jingle. Would still like to hear from any of you who have had any experiences with such. Thanks again.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on March 26, 2014 at 11:50am

Alright, I read his thoughts and he doesn't give any real solution (because there isn't one) as to how one can avoid paying income tax on income.  Also, I have a company that does evaluations but unfortunately I'm bound by a CA to not discuss them.  Sorry.

Permalink Reply by al raptoria on March 26, 2014 at 12:08pm

Of course he doesn't give away his decades of learned and proprietary information to throngs of strangers with no real understanding of the Tax Code. EMAIL him.CALL him! In a free, no pressure consultation he describes the basics, then sent us a chart and further details. And offered to talk with our Attorney and other CPA if WE desired. It is NOT about evading nor even avoiding taxation. It IS about deferring tax payments and moving the Signing Bonuses from the higher rate of  "taxed as regular income" status down to the lower rate of a "capital gains" tax and keeping it DEFERRED while the tax savings are otherwise invested, thus making more income for you using the money you would have paid the IRS in one fell swoop up front - while you are waiting for the smaller DEFERRED tax bill, also strategically paid for in INCREMENTS rather than one big tax bill.

Apologies accepted. Thanks.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on March 26, 2014 at 4:03pm

"Of course he doesn't give away his decades of learned and proprietary information to throngs of strangers with no real understanding of the Tax Code. EMAIL him.CALL him!"

No, thank you, I have an accounting firm that does this sort of thing and doesn't troll message boards like a penny stock-shilling huckster.  Rental income is not a capital gain.  Period.  Selling minerals and royalties are a capital gain and yes, a 1031 will defer payment for as long as you're in said exchange, but that has literally nothing to do with lease bonus money.  This sounds like a scam.  If the people I've worked with--people who have been doing this for generations--cannot find out how to skirt tax bills then I'm telling you, it cannot be done.

Permalink Reply by george m vietze on March 26, 2014 at 12:24pm

Some of us do not think mitigating the affect of taxes on gains from mineral rights is "bs".  No one can "avoid" taxes on gains made from sale of assets but a few ways to defer taxes for long periods of time and sometimes pass on that "deferral" to future generations.

1.  A 1031 exchange where you can exchange mineral rights for other interest in real estate like income producing property which generates income and if you borrow on that property those dollars are not taxable because it is a loan not income and the cash flow from the property pays for the loan.

2.  A transfer of mineral rights to a family trust where you can have control over those rights during your lifetime but you heirs receive the benefits at the value at the time of setting up the trust and if those mineral rights get produced and the value increases it does not get included in your estate because the trust was set up a long time in advance of your death.

Their are many more strategies that a professional tax man with experience in gas and oil can advise you to do to help you maximize the dollars you keep.  Mineral rights can generate significant value and income and you owe it to your family and yourself not to squander any money for taxes unnecesarilly and before you have to.  Not everyone wants to deal with the complexities of owning other real estate assets and I can understand that but if you own serious amounts of mineral rights that are eventually going to be owned by your heirs anyway, it might be prudent to talke to a competent tax advisor and avoid going through your estate and sometimes forcing your heirs to sell some of those mineral rights in order to pay taxes.

This does not fit everyones situation but whatever your situation is, if you have serious value in mineral rights you owe it to yourself and your heirs to preserve as much of those rights as you can for yourself and your heirs.  To me, that is not "bs".

Permalink Reply by al raptoria on March 26, 2014 at 5:46pm

Thank you George.

I'm done with this thread now, as I contacted Gustavson for the Valuation - thanks to your referral George. And I have no need nor time to try to medically tube hydrating water into any errant horses, or other horse-like beings, who appear only to muddy up the waters of logic, yet refuse themselves a wise and generous drink. 

I also do not linger where I have been shown such libelous disrespect, i.e. mislabeling my sincere and selfless efforts to save Strangers thousands if not millions of dollars; being instead called  a "penny stock-shilling huckster."  It is BECAUSE of this forum I will be saving hundreds of thousands of dollars, including but not solely via the posts by Arthur P Jensen, CPA and Financial Planner. I have been and continue to be a trustworthy member of this forum as I feel it's the least I can offer in return for what I learn here. 

At some point protracted "skepticism" becomes arrogant trolling, paranoiac, and mildly amusing to the intelligent observers - and always speaks more about the critics' character than it speaks to the topic of their critique.

And so I bid thee adieu - each reader here certainly has enough information to inspire their next steps. And a careful reading of all the posts made elsewhere on this forum, by those who have posted here will certainly help sway readers toward either category: (1) due diligence in furthering your own research with an astute and open mind (2) settling into the illusory selfish self-satisfaction of pre-judgment and braggadocio while attempting to taunt others with their withholding access here to their own "experts" of some presumed but dubious value.  

Fare-thee-well one and all. And George, thank you again for your valuable contributions. This is just for you: "Internal Revenue Code section 1221 defines capital assets. Land is a capital asset and the sub-surface mineral rights are capital assets. The separation of those rights from the surface land can legally be done and sold separately. Further, Internal Revenue Code 453 defines and provides for installment sale reporting, allowing the selling (of the limited mineral rights to an arm's length entity created by the CPA) landowner to select specific terms of when and how he will be paid and when he will be taxed....of course there is more, and you have the Forum member CPA's name if interested.

This has been a public service announcement, not an advertisement. Best to All.

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