(a) To the extent that a fiduciary accounts for receipts from an interest in minerals or other natural resources pursuant to this section, the fiduciary shall allocate them as follows:

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Terms Used In Alabama Code 19-3A-411

  • Decedent: A deceased person.
  • Donor: The person who makes a gift.
  • Fiduciary: A trustee, executor, or administrator.
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
(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 payment, shut-in-well payment, take-or-pay payment, bonus, or a delay rental that is more than nominal, then ninety percent (90%) 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 subdivisions (1), (2), or (3), then ninety percent (90%) 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, then ninety percent (90%) of the amount shall be allocated to principal and the balance to income.
(c) This chapter 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 January 1, 2001, then the fiduciary may allocate receipts from the interest as provided in this chapter or in the manner used by the fiduciary before January 1, 2001. If the trust acquires an interest in minerals, water, or other natural resources after January 1, 2001, then the fiduciary shall allocate receipts from the interest as provided in this chapter.
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