oil and mineral property taxes,
In August, 2008 I held 84 acres of undeveloped property in Pennsylvania which was determined to have gas and oil mineral deposits.
I entered a 5-year paid-up lease agreement with a drilling company for their use of the land to drill and extract oil/gas and remit me roalyties for any oil/gas extracted.
I received up front from the Company $246,000 for the lease plus a $10,000 Royalty payment. For both I received a 1099-Misc form for year 2008 -- one with 'Royalties' $10,000) and one with 'Rents' ($246,000).
Are these amounts both taxable? And, if so, how reported for federal and state purposes?
Thank you!
