Company: BSM
Filing Date: 2025-04-30
Form Type: DEF 14A
Source: 0001193125-25-107202
Chunk: 76

Company: Black Stone Minerals, L.P.
Filing Date: 2025-04-30
Form: DEF 14A
Chunk 76
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 additional common units received upon exercise will have a tax basis that equals the amount of cash (if any) paid by the participant, plus the amount of compensation income recognized by the participant under the rules described above.

The 2025 LTIP generally prohibits the transfer of Awards other than by will or according to the laws of descent and distribution, but the 2025 LTIP allows the Committee to permit the transfer of Awards in limited circumstances, in its discretion. For income and gift tax purposes, certain transfers of options should generally be treated as completed gifts, subject to gift taxation.

The IRS has not provided formal guidance on the income tax consequences of a transfer of options (other than in the context of divorce) or UARs. However, the IRS has informally indicated that after a transfer of stock options (other than in the context of divorce pursuant to a domestic relations order), the transferor will recognize income, which will be subject to withholding, and employment or payroll taxes will be collectible at the time the transferee exercises the stock options. If an option is transferred pursuant to a domestic relations order, the transferee will recognize ordinary income upon exercise by the transferee, which will be subject to withholding, and employment or payroll taxes (attributable to and reported with respect to the transferor) will be collectible from the transferee at such time.

In addition, if a participant transfers a vested option to another person and retains no interest in or power over it, the transfer is treated as a completed gift. The amount of the transferor’s gift (or generation-skipping transfer, if the gift is to a grandchild or later generation) equals the value of the option at the time of the gift. The value of the option may be affected by several factors, including the difference between the exercise price and

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**the fair market value of the stock, the potential for future appreciation or depreciation of the stock, the time period of the option and the illiquidity of the option. The transferor will be subject to a federal gift tax, which will be limited by (i) the annual exclusion of $19,000 per donee (for 2025, subject to adjustment in future years), (ii) the transferor’s lifetime unified credit, or (iii) the marital or charitable deductions. The gifted option will not be included in the participant’s gross estate for purposes of the federal estate tax or the generation-skipping transfer tax.

This favorable tax treatment for vested options has