Inherited mineral rights
I was contacted by a company to buy mineral rights that I was unaware of. My dad passed in 2009. I sold the rights to this company and had to probate the will this year. The mineral rights are in Wyoming and I live in California. Since we couldn't find a will, my stepsister inherited half the interest from her mom that passed in 2022 but she signed a quit claim deed to me. I'm having a valuation done. Do we need to value the rights in 2022 for her portion for tax purposes?
Quick Answer:
Yes, for the portion of the mineral rights the stepsister inherited from her mother, the fair market value (FMV) on the mother's date of death in 2022 is the relevant valuation for tax basis purposes.
When assets are inherited, their basis is generally stepped up (or down) to the FMV on the decedent's date of death. Since the stepsister inherited her interest from her mother who passed in 2022, her basis in that portion would be its FMV as of that date. When she then transferred this interest to you via a quitclaim deed, you generally receive her basis in that specific portion.
Therefore, a valuation of that portion as of the mother's date of death in 2022 is necessary to establish the correct tax basis for that part of the mineral rights.
Note: This answer is provided for convenience only. It is important that you speak to a CPA about your individual tax situation.
