Taxes affect many stages of gas and oil production. Certain taxes apply before a well has been drilled, in the leasing phase. Other taxes apply to royalties, which arise after a well has been drilled. These and other taxes come at both the state and federal level and will vary depending on many factors such as location. Articles in this section deal with the taxation of gas and oil transactions.


Written by
about Taxes
on September 17, 2014

Tax Treatment of Right-of-Way Payments for Shale Leases

Over the last few years many landowners have begun receiving cash bonus payments for land leases related to the Marcellus and Utica Shale boom. In our work with clients in the Marcellus and Utica Shale regions, we have seen a recent uptick in landowners receiving offers to sign “pipeline right-of-way” agreements, as the need for pipelines has escalated due to the increasing maturity of the industry.

The payment for this right-of-way is considered an easement. The tax treatment of easements may result in income, a reduction in basis of all or part of the land, or both. The amount a landowner receives for granting an easement is generally considered to be a sale of an interest in real property.…

Written by
about Ownership and Transfers + Royalties + Taxes
on June 18, 2012

Minimizing Tax Impact of Oil and Gas Royalties

The impact oil and gas leasing has had on Ohio is remarkable.  A farmer who struggled to make ends meet one year could find himself with an income tax bill he never imagined the next.  Though we Ohioans have been blessed by these essential resources, allocating their value can be troublesome from a financial standpoint.  Many people may find themselves unsure of what to do with signing bonus money.  It doesn’t take a financial adviser to outline the basic options: save it or spend it.  Prudence dictates the best of these two options.

Everyone’s financial situation is different.  However, people from all types of situations certainly have people that they care about and would like to support if they are able. …