The Florida Senate

738.09  Disposition of natural resources.--

(1)  If any part of the principal consists of a right to receive royalties, overriding or limited royalties, working interests, production payments, net profit interests, or other interests in minerals or other natural resources in, on, or under land, the receipts from taking the natural resources from the land shall be allocated as follows:

(a)  If received as rent on a lease or extension payments on a lease, the receipts are income.

(b)  If received from a production payment, the receipts are income to the extent of any factor for interest or its equivalent provided in the governing instrument. The fraction of the balance of the receipts that the unrecovered cost of the production payment bears to the balance owed on the production payment, exclusive of any factor for interest or its equivalent, shall be allocated to principal. The receipts not allocated to principal are income.

(c)  If received as a royalty, overriding or limited royalty, or bonus, or from a working, net profit, or any other interest in minerals or other natural resources, receipts not provided for in the preceding paragraphs shall be apportioned on a yearly basis in accordance with this paragraph, whether or not any natural resource was being taken from the land at the time the trust was established. There shall be added to principal as an allowance for depletion the part of the gross receipts that is allowed to the trust as a deduction for depletion in computing taxable income for federal income tax purposes. The balance of the gross receipts is income after payment of all direct and indirect expenses.

(2)  If a trustee on January 1, 1976, held an asset of depletable property of a type specified in this section, the trustee shall allocate receipts from the property in the manner used before January 1, 1976, but for all depletable property acquired after January 1, 1976, by an existing or new trust, the method of allocation provided herein shall be used.

(3)  This section does not apply to timber, water, soil, sod, dirt, turf, or mosses.

History.--s. 1, ch. 74-106; s. 16, ch. 75-221; s. 1053, ch. 97-102.

Note.--Created from former s. 690.10.