                                 CODE OF VIRGINIA

MINERALS, WATER, AND OTHER NATURAL RESOURCES (§ 64.2-1058)

A. To the extent a fiduciary does not account for a receipt from an interest in
minerals, water, or other natural resources as a business under § 64.2-1050,
the fiduciary shall allocate the receipt:

   1. To income, to the extent received:
   				a. As delay rental or annual rent on a lease;
   				b. As a factor for interest or the equivalent of interest under an
   agreement creating a production payment; or
   				c. On account of an interest in renewable water;

   2. To principal, if received from a production payment, to the extent
   subdivision 1 b does not apply; or

   3. Between income and principal equitably, to the extent received:
   				a. On account of an interest in nonrenewable water;
   				b. As a royalty, shut-in-well payment, take-or-pay payment, or bonus; or
   				c. From a working interest or any other interest not provided for in
   subdivision 1 or 2 or subdivision a or b.

B. This section applies to an interest owned or held by a fiduciary whether or
not a settlor was extracting minerals, water, or other natural resources before
the fiduciary owned or held the interest.

C. An allocation of a receipt under subdivision A 3 is presumed to be equitable
if the amount allocated to principal is equal to the amount allowed by the
Internal Revenue Code of 1986, as amended, as a deduction for depletion of the
interest.

D. If a fiduciary owns or holds an interest in minerals, water, or other natural
resources before July 1, 2022, the fiduciary may allocate receipts from the
interest as provided in this section or in the manner used by the fiduciary
before July 1, 2022. If the fiduciary acquires an interest in minerals, water,
or other natural resources on or after July 1, 2022, the fiduciary shall
allocate receipts from the interest as provided in this section.

HISTORY: 2022, c. 354.