(1) To the extent that a trustee accounts for receipts from an interest in minerals or other natural resources pursuant to this section, the trustee shall allocate them as follows:
If received as nominal delay rental or nominal annual rent on a lease, a receipt mustbe allocated to income.
If received from a production payment, a receipt must be allocated to income if andto the extent that the agreement creating the production payment provides a factor for interest or its equivalent. The balance must be allocated to principal.
If an amount received as a royalty, shut-in-well payment, take-or-pay payment, bonus, or delay rental is more than nominal, ninety percent must be allocated to principal and the balance to income.
If an amount is received from a working interest or any other interest not providedfor in paragraph (a), (b), or (c) of this subsection (1), ninety percent of the net amount received must be allocated to principal and the balance to income.
An amount received on account of an interest in water that is renewable must beallocated to income. If the water is not renewable, ninety percent of the amount must be allocated to principal and the balance to income.
Subparts 1 through 6 of this part 4 apply whether or not a decedent or donor wasextracting minerals, water, or other natural resources before the interest became subject to the trust.
If a trust owns an interest in minerals, water, or other natural resources on July 1,2001, the trustee may allocate receipts from the interest as provided in subparts 1 through 6 of this part 4 or in the manner used by the trustee before July 1, 2001. If the trust acquires an interest in minerals, water, or other natural resources after July 1, 2001, the trustee shall allocate receipts from the interest as provided in subparts 1 through 6 of this part 4.
Source: L. 2000: Entire part R&RE, p. 1142, § 1, effective July 1, 2001. L. 2009: (3) and (4) amended, (HB 09-1241), ch. 169, p. 744, § 8, effective April 22.
Editor's note: This section is similar to former § 15-1-414 as it existed prior to 2001.