Massachusetts General Laws
Chapter 203d - Principal and Income
Section 20 - Minerals, Water, and Other Natural Resources

Section 20. (a) If 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 shall be allocated to income.
(2) If received from a production payment, a receipt must be allocated to income if 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, shut-in-well payment, take-or-pay payment, bonus, or delay rental is more than nominal, 90 per cent 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 paragraph (1), (2), or (3), 90 per cent 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, 90 per cent 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, the trustee may allocate receipts from the interest as provided in this chapter or in the manner used by the trustee. If the trust acquires an interest in minerals, water or other natural resources, the trustee shall allocate receipts from the interest as provided in this chapter.

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