Help, please

[AnnieR]

I haven't posted here for quite a while, this is also my last year as a preparer, so I guess it's right that I end up with a question that I've received a lot of answers to, none the same. Client has 5 rental properties, bid on another one at sheriff's auction. He won the bid, put $6100 (10%) down. He found out later that the "owner" of the property had sold the mineral rights a week before the auction. He dropped out of the sale at that time. We live in an area of eastern OH that is in the middle of the "fracking" boom and mineral rights can be quite lucrative. My client has been trying to get his deposit back, hired a lawyer, all to no avail. Is there anyway he can write off the 10% and/or the $600 he paid in lawyer fees? Thanks for any/all answers. I'd really appreciate it.

AnnieR

[rfassett]

Hi AnnieR, it is my understanding that any deposit for the winning bid at a sheriff sale is a non-refundable deposit, as your client is finding out. I suppose if your client is not treating his enterprise as a "business" he would be restricted to a capital loss write-off.

Good luck in your upcoming retirement. BTW, oil and gas leases are going nuts to the right of the border as well. Most of my county leased for $3,875 an acre with 18% royalty. I understand the county to the north may be doing even better.

[kcjenkins]

might want to ask the lawyer about the legality of that mineral rights sale, if the property was in foreclosure at the time?

[AnnieR]

Thank you both for your answers. I will suggest that he contact his lawyer again or find a new one. and rfassett, it is crazy here, too. I'm in Mahoning county, Columbiana county is across the road, and that's where all the action is taking place right now. People grabbed onto these deals really quickly and got $1000 an acre. Now people are getting the $3k and up prices and those who signed up first are trying to get their deals negated. The companies that originally buy the rights are re-selling them to the oil & gas companies for 3 & 4 times what they paid for them. It is really a mess.

AnnieR

[Margaret CPA in OH]

I feel sorry for all living in those areas with the coming pollution above and below ground. I don't believe the payments received by anyone are enough for the damage that will be caused or even the risk involved. I'm not intending to start a dialog about fracking and won't participate - just had to, on this occasion, express my concern and dismay.

A favorite saying from a 19th century Cree Indian: Only when the last tree has died and the last river has been poisoned and the last fish has been caught will we realize that we cannot eat (or drink -my insert) money.

[rfassett]

Yep - greed is a very ugly thing. I am in Mercer County. I understand some of the prices in Lawrence County were jumping all over the place, but by the time the lease brokers moved into my county property owners had pretty much organized and the prices stabalized, albeit pretty high, in my opinion. Crawford County and Venango County to the northeast are seeing even high prices because of the Utica reservoir.

Margaret, I do not disagree one iota with your sentiment. It is not going to be pretty.

[Jack from Ohio]

I have seen my natural gas bill cut 60% due to the newly discovered gas entering the market. Two years ago, GCR was $1.05/ccf. August bill sees the GCR at $.39/ccf. I use a very small amount of natural gas for heat and hot water. Larger consumers will save even more.

The "greed" is driven by a marketplace demand. I prefer the word "entrepreneurial spirit" seeing an opportunity to help supply meet demand. Calling the entrepreneurs "greedy" is the basis of class warfare, and I am appalled at how quickly we insult those that choose to take the chances and do things that we could have but did not choose to do.