[§557A-411]  Minerals, water, and other
natural resources.  (a)  Receipts from an interest in minerals or other
natural resources shall be allocated as follows:



(1) If received as nominal delay rental or nominal annual
rent on a lease, a receipt shall be allocated to income.



(2)  If received from a production payment, a receipt
shall be allocated to income if and to the extent that the agreement creating
the production payment provides a factor for interest or its equivalent.  The
balance shall be allocated to principal.



(3)  If an amount received as a royalty, bonus, or
delay rental is more than nominal, ninety per cent shall be allocated to
principal and the balance to income.



(4)  If an amount is received from a working interest
or any other interest not provided for in paragraph (1), (2), or (3), ninety
per cent of the net amount received shall be allocated to principal and the
balance to income.



(b)  An amount received on account of an
interest in water that is renewable shall be allocated to income.  If the water
is not renewable, ninety per cent of the amount shall be allocated to principal
and the balance to income.



(c)  This chapter applies without regard to
whether a decedent or donor was extracting minerals, water, or other natural
resources before the interest became subject to the trust.



(d)  If a trust owns an interest in minerals,
water, or other natural resources on July 1, 2000, the trustee may allocate
receipts from the interest as provided in this section or in the manner used by
the trustee before July 1, 2000.  If the trust acquires an interest in
minerals, water, or other natural resources after July 1, 2000, the trustee
shall allocate receipts from the interest as provided in this section. [L 2000,
c 191, pt of §1]



 



Revision Note



 



  "July 1, 2000" substituted for "the effective
date of this chapter".