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Dear Mr. Scott--

I hope this is an appropriate question for your expertise. I have recently sold some mineral rights in Love Co. and now am facing a huge jump in capital gains taxes for 2014.  I know that I only have to pay capital gains on the increase in value from the time I inherited until I sold it.  My question is how to determine what the value of the mineral rights were in 1979. My mineral rights were in Love Co.  T6S R1W, Section 36.  My brothers and I each owned 6 2/3 ac.  I would appreciate any help you can give me with this, and with how I might be able to do this on my own in the future--although I'm planning on holding on to my remaining mineral rights!

Thank you!

Best thing to do would be to try to find some previous sales from the late 70's or early 80's in or around this section filed in the Love County clerk's office. Most will not have actual prices paid on them but you might get lucky and find one that does. My guess would be that they were not worth more than $500 per acre back then to most buyers. Not good for tax purposes I know, but it's hard to find records of sale prices that far back.

You might also try to find "lease bonus" amounts (per acre) that were paid around that time and multiply the amount by two to arrive at an approximate value at the time, since many buyers to this day value minerals based on a multiple of what they could be leased for. Two would be an average multiple, though some buyers use slightly higher multiples depending on the area (i.e. three, four, etc., but two or three is the most common.) Forced-pooling orders issued by the Oklahoma Corporation Commission during the period around 1979 would also be helpful as the bonus amounts listed in such orders are often indicative of the average lease bonus prices being paid in a given area at the time the pooling order was issued.

You might also check with a family law attorney to be sure that inherited mineral rights are even subject to capital gains tax valuation. Probably are, but couldn't hurt to check. With only 6 and 2/3 acres I can't imagine the capital gains tax would be much anyway though. There has been no well producing in this section since 1979 that I could find so at least you don't have to worry about that for valuation.

Note: I found a couple of old forced-pooling orders from 1980 and 1982 for surrounding sections that indicated bonus amounts of between $200 and $300 per acre. Thus, the value back then could be approximated at between $400 and $600 per acre based on the "multiple" mentioned above. Just an approximation, but probably good enough for tax purposes.

Hope this helps you out.
Frederick M. "Mick" Scott CMM RPL
The Mineral Hub  


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Frederick M. Scott


Oil and gas leasing, lease negotiations, how to best deal with the oil and gas companies or their representatives, buying/selling mineral rights, forced-pooling, correlative rights, deeds and conveyances, and "post-production" costs. I am most experienced with Oklahoma properties and laws, but am able to answer questions concerning other oil and gas producing states in many cases.


I am a Certified Professional Mineral Manager (CMM) certified by the National Association of Royalty Owners (NARO) in Tulsa, OK. I am also a Registered Professional Landman (RPL) with the American Association of Professional Landmen (AAPL). I have managed my family's oil and gas properties in Oklahoma for over 10 years and have dealt with many landmen, title analysts, attorneys and other oil and gas professionals in the process. I have written several articles which have appeared in various oil and gas industry magazines and newsletters. I have negotiated and drafted leases, prepared deeds, affidavits, and other legal instruments relating to my own minerals, as well as performed title, legal research, and curative work for same. I have acquired a good deal of knowledge on the subjects of oil and gas law, mineral appraisal, and landwork over the past ten years, and also worked as a professional landman and lease buyer for a time. I've seen the business from "both sides" and therefore feel confident I can help out most of the folks who ask questions in this forum.

National Association of Royalty Owners (NARO); American Association of Professional Landmen (AAPL)

National Association of Royalty Owners "Action Report" (ROAR); NADOA Magazine, The Mineral Hub, Landman Magazine, and several royalty owner association group's newsletters.

Certified Mineral Manager (CMM), Registered Professional Landman (RPL)

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