2006 New York Code - Minerals, Water, And Other Natural Resources

 
  § 11-A-4.11 Minerals, water, and other natural resources
    (a)  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:
    (1)  If  received  as nominal delay rental or nominal annual rent on a
  lease, a receipt must be allocated to income.
    (2) If received from a production payment, a receipt must 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 must be allocated to principal.
    (3)  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.
    (4) If an amount is received from a  working  interest  or  any  other
  interest  not  provided  for  in  subparagraph  (1), (2), or (3), ninety
  percent of the net amount received must be allocated  to  principal  and
  the balance to income.
    (b)  An  amount  received  on  account of an interest in water that is
  renewable must be allocated to income. If the water  is  not  renewable,
  ninety  percent  of  the  amount  must be allocated to principal and the
  balance to income.
    (c) This article applies whether  or  not  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  the  effective  date  of  this  article,  the trustee may
  allocate receipts from the interest as provided in this  article  or  in
  the  manner  used  by  the  trustee  before  the  effective date of this
  article. If the trust acquires an interest in minerals, water, or  other
  natural  resources after the effective date of this article, the trustee
  shall allocate receipts from the interest as provided in this article.