FAQS
GENERAL QUESTIONS
The Trust was established in November 1980 by Trust Indenture between Southland Royalty Company and The Fort Worth National Bank. Argent Trust Company is the successor to The Fort Worth National Bank as Trustee of the Trust.
On July 31, 2017 Hilcorp San Juan LP (“Hilcorp”) completed its purchase of San Juan Basin assets from ConocoPhillips, which included the Subject Interests owned by Burlington Resources Oil & Gas Company LP, a subsidiary of ConocoPhillips. Therefore, Hilcorp is the current owner and operator of most of the Subject Interests and the successor, through a series of purchases, assignments and mergers, to Southland Royalty Company.
No. The Trust is a grantor trust.
No. Unlike actively managed trusts where a management team is empowered to grow the trust’s assets through new acquisitions, the Trustee is not empowered to engage in any business or commercial activity, nor can the Trustee use any portion of the Trust Estate to acquire additional properties.
Hilcorp, as the owner of most of the working interests and other leasehold interests comprising the Subject Interests, receives revenue monthly from the natural gas purchasers. Hilcorp deducts its production and development costs (including applicable lease operating expenses, capital expenses and taxes) and wires the Trust 75% of the remaining net profits. The Trustee adds investment income, deducts administrative expenses, and then distributes all remaining funds, net of cash reserves.
Royalty distributions are paid monthly to Unit holders who hold Units on the Record Date, the last business day of the month. The distributions are paid ten business days following the Record Date.
We don’t know. Hilcorp has informed the Trust that it is unable to estimate the productive life of the Subject Interests.
You can read the Original Prospectus (Here). You can also request a mailed copy by writing San Juan Basin Royalty Trust, Argent Trust Company, Trustee, 3838 Oak Lawn, Suite 1720, Dallas, TX 75219, or email: trustee@sjbrt.com
Yes. An electronic version of a map showing the location of wells burdened by the Trust’s interests is available to unit holders upon request and at no charge by emailing trustee@sjbrt.com
You can read the Original Conveyance by (Here) and the corrections (Here). You can also request a mailed copy by writing San Juan Basin Royalty Trust, Argent Trust Company, Trustee, 3838 Oak Lawn, Suite 1720, Dallas, TX 75219, or email trustee@sjbrt.com
TAX QUESTIONS
Although the deadline imposed by the IRS is not until April 1st, the tax information booklet is usually posted to the website by the end of January, and mailed in February.
The Trustee does not maintain any Unit holder records, including payment records. The tax booklet sets out the tax consequences for one Unit, which allows the Unit holder to make the appropriate calculations from the tax schedules. Tax booklets are forwarded to beneficial Unit holders from brokers. The Trustee forwards booklets to Holders who have requested to be placed on a mailing list.
The Trust is a grantor trust, not a partnership, and we do not have the same reporting requirements as a partnership. Certificated holders receive individualized tax letters at year-end. Street-name holders should receive a copy of Form 1099 MISC and Form 1099 INT from their broker and a tax information booklet which allows those holders to make the appropriate calculations from the tax schedules. Holders may also use the calculators on the website to compute the items of income and deduction to be reported.
You will need to know the number of Units held as of each monthly Record Date, which is the last business day of the month. Since we don’t maintain any Unit holder records, you should consult your broker or review your files for that information. Enter the number of Units in each of the boxes adjacent to the months Units were held.
You will need to know your original cost basis for each block of Units. The cost basis is the total purchase price of the Units, plus any commissions paid. You will also need to know the purchase date, and sale date if Units were sold during the year. Since we don’t maintain any Unit holder records, you should consult your broker or review your files for that information.
No. The distributions are considered ordinary income, taxed at your marginal rate.
Since the income of the Trust is deemed to have been received by each Unit holder at the time the Trust receives the income on the last business day of each month, rather than when the income is actually paid to Unit holders in the following month, it is likely a timing difference. The income to be reported is associated with amounts distributed in February of one year through January of the next year. Although a 1099-MISC should report income taxable in January through December (but received in February through the following January), in most cases, it does not. Holders should use the tax booklet or the calculators on the website to report the income from the Trust correctly.
The distribution itself is not a return of capital. However, Unit holders are entitled to a recovery of their capital investment via a sale of Units and through cost depletion deductions. The depletion allowance may be considered a return of capital.
No. You do not report trust income in an IRA or other tax-deferred account.
The amounts on the Form 1099’s should be reported to the IRS, but make sure that you do not report the amounts twice. If you accurately report the tax information contained in the tax information booklet, you should not also report the amounts set forth on the Form 1099’s since such amounts are already provided in the tax information booklet.
DEPLETION QUESTIONS
The cost basis is the total purchase price of the Units, plus any commissions paid.
No. You will need to calculate the depletion for each block of Units purchased separately.
You will need to know your original cost basis for each block of Units purchased. The cost basis is the total purchase price of the Units, plus any commissions paid. You will also need to know the purchase date, and sale date if Units were sold during the year.
No. You do not have to take the full cost depletion amount on your tax return. HOWEVER, you must reduce your cost basis by the full amount allowable.
Percentage depletion is an alternate method of calculating the depletion allowance for mineral property and some oil or gas wells. The allowance is a percentage (usually 15% for oil and gas) of the gross income from the property during the year. For Units purchased after 10-11-90, a taxpayer is allowed the greater of cost or percentage depletion. In either case, you must reduce your cost basis by the full amount allowable.
Disclaimer
The information contained in this section of our website is concise and is intended to only be a summary. Therefore, any information provided may not be complete. Unitholders are encouraged to read the Trust Agreement which is the document that describes the rights of Unitholders. Also, in the event of a conflict between anything described on our Website and the terms of the Trust Agreement, the Trust Agreement shall control. Furthermore, the federal, state and local tax consequences, and associated tax filing responsibilities, to a Unitholder of the ownership and sale of Units is dependent in part on each Unitholder’s specific tax circumstances; therefore, Unitholders should consult their own tax advisors regarding all tax issues concerning the ownership and sale of Units. The Trust exercises thorough effort to ensure the accuracy of the content of this Website, but makes no warranties as to the site’s accuracy or completeness and shall in no way be responsible for any loss or damages resulting from inaccuracies in information or any alterations made by third parties.
