22-3-411 - Receipts normally apportioned -- Minerals, water, and other natural resources.
22-3-411. Receipts normally apportioned -- Minerals, water, and other naturalresources.
(1) To the extent that a trustee accounts for receipts from an interest in minerals or othernatural resources pursuant to this section, the trustee shall allocate them as follows:
(a) If received as nominal delay rental or nominal annual rent on a lease, a receipt mustbe allocated to income.
(b) If received from a production payment, a receipt must be allocated to income if and tothe extent that the agreement creating the production payment provides a factor for interest or itsequivalent. The balance must be allocated to principal.
(c) If an amount received as a royalty, shut-in-well payment, take-or-pay payment, bonus,or delay rental is more than nominal, 90% must be allocated to principal and the balance toincome.
(d) If an amount is received from a working interest or any other interest not provided forin Subsection (1)(a), (b), or (c), 90% of the net amount received must be allocated to principaland the balance to income.
(2) An amount received on account of an interest in water that is renewable must beallocated to income. If the water is not renewable, 90% of the amount must be allocated toprincipal and the balance to income.
(3) This chapter applies whether or not a decedent or donor was extracting minerals,water, or other natural resources before the interest became subject to the trust.
(4) If a trust owns an interest in minerals, water, or other natural resources on May 3,2004, the trustee may allocate receipts from the interest as provided in this chapter or in themanner used by the trustee before May 3, 2004. If the trust acquires an interest in minerals,water, or other natural resources after May 3, 2004, the trustee shall allocate receipts from theinterest as provided in this chapter.
Enacted by Chapter 285, 2004 General Session