55-13-9 Disposition of natural resources.
55-13-9.
Disposition of natural resources.
(a)
If any part of the principal consists of
a right to receive royalties, overriding
or limited royalties, working interests,
production payments, net profit
interests, or other interests in minerals
or other natural resources in, on or
under land, the receipts from taking
the natural resources from the land
shall be allocated as follows:
(1)
If received as rent on a lease or extension payments on a lease, the receipts are
income.
(2)
If received from a production payment, the receipts are income to the extent of any
factor for interest or its equivalent provided in the governing instrument. There
shall be allocated to principal the fraction of the balance of the receipts which the
unrecovered cost of the production payment bears to the balance owed on the
production payment, exclusive of any factor for interest or its equivalent. The
receipts not allocated to principal are income.
(3)
If received as a royalty, overriding or limited royalty, or bonus, or from a working,
net profit, or any other interest in minerals or other natural resources, receipts not
provided for in the preceding paragraphs of this section shall be apportioned on a
yearly basis in accordance with this paragraph whether or not any natural resource
was being taken from the land at the time the trust was established. Twenty-seven
and one-half percent of the gross receipts (but not to exceed fifty percent of the net
receipts remaining after payment of all expenses, direct and indirect, computed
without allowance for depletion) shall be added to principal as an allowance for
depletion. The balance of the gross receipts, after payment therefrom of all
expenses, direct and indirect, is income.
(b)
If a trustee, on July 1, 1984, held an item of depletable property of a type specified in this
section he shall allocate receipts from the property in the manner used before July 1, 1984,
but as to all depletable property acquired after July 1, 1984 by an existing or new trust,
the method of allocation provided herein shall be used.
(c)
This section does not apply to timber, water, soil, sod, dirt, turf, or mosses.
Source: SL 1984, ch 323, § 9.