Comment

Comment by Dan on December 1, 2010 at 6:35pm

I have a question: Besides the royalty payment (a percentage of gas or oil produced) and the lease payment (a $/acre amount paid up front to reserve the land for a number of years) is there something else called the signing bonus? Or is the signing bonus the same thing as the lease payment?

Comment by Chuck White on November 30, 2010 at 1:24pm

Be Careful;
You may be giving up 6% and gain no more than you can do yourself.
Fear is a great tactic, don't fall for it.

Comment by jerry allen on November 30, 2010 at 7:41am

6% of acerage bonus is what I was told. I'm not sure but I believe it also covers their work on the amendments etc. to the lease prior to signing.

Comment by Dan on November 30, 2010 at 7:16am

Maybe I read that too quickly. Is it 6% of the one-time lease payment, or 6% of the royalties?

Comment by jerry allen on November 30, 2010 at 6:52am

I didn't attend the meeting but called and talked to the attorney who arranged it. He is working with attorneys from Washington, Pa attempting to form a land group in the eastern Ohio area. They want 6% of the signing bonus for their services.

Comment by john harold on November 30, 2010 at 6:46am

Did anyone go to the meeting in Wintersville advertised in the News Herald last week? Is it for a land owner group?

Comment by tom dowdle on November 18, 2010 at 7:50am

What companies are looking for mineral leases in Harrison Co.? Thanks

Comment by Al Cramblett on November 18, 2010 at 5:36am

Thanks to the previous three gentlemen for their post. The information you provided helps to educate the rest of us.

Leonard, the answer to your question is truly complex and is actually regulated by a revenue ruling. I have encountered many tax professionals that argue that the bonus payment can be spread over several years. Following is the official IRS position:


Cash Bonus
IRS Revenue Ruling 68-606
Some leases attempt to spread out the payment of bonus money.

Rev. Rul. 68-606 requires that:

If the lessee is unable to avoid such payments by production or by
terminating the lease, then the annual payments are regarded as
an installment lease bonus. Payments received from an obligation
that is not salable or freely transferable are income in the years the
payments are received. However, if the rights to the bonus
payments are freely transferable and readily salable, the total
amount of the lease bonus is includible in income at the time the
lease is executed even though the bonus is payable in installments

Comment by tom dowdle on November 18, 2010 at 5:00am

Hi I'm new to the group. Have land in Archer Twp. Can payment for the lease be paid out yearly instead of lump sum?

Comment by Dan on November 18, 2010 at 2:22am

Hi, I've got 132 acres in Rumley Township in Harrison. Currently negotiating with Kenyon. Just introducing myself.

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