§ 637.423 — Minerals, water, and other natural resources

Iowa § 637.423

• Jurisdiction: Iowa
• Title XV: JUDICIAL BRANCH AND JUDICIAL PROCEDURES
• Ch. 637: UNIFORM PRINCIPAL AND INCOME ACT

Text

1. Receipts from an interest in minerals or other natural resources must be allocated
according to the type of payment, as follows:
a. If received as nominal delay rental or annual rent on a lease, a receipt must be allocated
to income.
b. If received from a production payment, a receipt must be allocated to income 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.
c. If an amount received as a royalty, bonus, or delay rental is more than nominal, ninety
percent must be allocated to principal and the balance to income.
d. If an amount is received from a working interest or any other interest not provided for
in paragraph “a”, “b”, or “c”, ninety percent of the net amount received must be allocated to
principal and the balance to income.
2. 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.
3. This chapter applies without regard to whether a decedent or donor was extracting
minerals, water, or other natural resources before the interest became subject to the trust.
4. If a trust owns an interest in minerals, water, or other natural resources on or before
July 1, 2000, the trustee may allocate receipts from the interest as provided in this section
or in the manner used by the trustee before July 1, 2000. If the trust acquires an interest
in minerals, water, or other natural resources after July 1, 2000, the trustee shall allocate
receipts from the interest as provided in this section.