Lensman & Associates is forming a group in Belmont County. Anyone with acreage in Belmont County should contact this firm quickly if they are tired of waiting for an offer. They will submit bid packages October 10th and finalize bids on November 5th. They are negotiating to get the full bonus before December 31st so it applies to 2011 taxes. Taxes are almost guaranteed to increase in 2012 for both federal and state. With the recent announcement from Chesapeake about the production of the well in Harrison County, this offer should be fairly good. The XTO deal a few weeks ago is looking like 19% on the net royalty, not on the gross and $4950/acre bonus. The new deal should be better than what XTO was offering.
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Those folks are trying induce panic in the hope of profiting from the fears of others. If they can spook landowners, they can to some degree control them. If they can get them to sign a quick lease, they win and the landowner loses, it's that simple.
Marginal tax rates top out a 35%, not 48%. Even when considering state taxes plus federal at the highest rates you only end up at 41.24% on the dollars in the highest brackets. You only pay the higher rate on the dollars that are within that tax bracket and not on the entire income. See this article on 2011 Federal Income Tax Brackets and Marginal Rates for a better explanation of how that works.
The IRS Withholding Calculator is another place you can easily calculate your withholding.
Below is a copy and paste of 2010 rates that I posted before.
Lease bonus money is taxed as unearned (passive) income and will be in whatever tax bracket your AGI fits in. I believe 2010 Federal tax brackets were 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.
Thank you for the break down. Either way, the rate is to high and does not encourage future investments and commerce.
Seems to me that the sacrifices made by the long term working investors and their families are all to often punished, while on the other hand irresponsible and wasteful spending leading to dependance on others is rewarded.
I need to say that the patient existing long time Smith Goshen Group is a ( non profit group) with the benevolent intention of enabling the members to see the true appreciation that friends and neighbors can provide when they work together for the best results of an entire group. This strength has and shall continue to grow and provide the clout and desirable acreage amount which will attract only companies with enough capital and backing to purchase and provide the development potential for these acres .This should not only result in one of the best overall monetary gain for the landowners but will provide the lasting protection for the various concerns of the landowners through a proper lease . The memory that shows how a well organized committee can bring back the values of pride and teamwork of all the membership for the benefit of everyone will long be remembered . The generosity and hard work from the committee is amazing since they are working to help everyone without the express desire to enrich themselves from the groups monetary gains . I personally have not seen this kind of teamwork very often in a small area like we have, when the various amount of money and false promises are dangled in our faces. I believe every current member should be proud to be able to be a part of this group and only those that can and will remain intact for all concerned should consider contacting the various committee members to be added into the group.
Is there any chance that the Smith-Goshen Group would grow and take on acreage in Northern Monroe County into the group? Wayne Township in Southern Belmont County has been accepted into the group. Malaga Township in Monroe County is on the county line and borders Wayne Township.
Larry Cain, I'm sure that you're following this site.
Now that there is an extension to the September deadline, would you now seriously consider, and possibility invite landowners from those townships located in Northern Monroe County that border Wayne Township into your group? Possibly Malaga, Sunsbury & Seneca Townships.
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