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How do I report the income from and sale of mineral rights?
If the income was:
An interest in an oil or gas property is a working interest if both of these are true:
This type of interest is created by the terms of the lease.
Report the sale of the working interest used in your business as a sale of Section 1231 property. Do this on Form 4797.
If you sold the mineral rights on a piece of real property you owned but didn't use in your trade or business, report the sale on Schedule D.