Company: MTR
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001104659-25-029944
Chunk: 6

Company: MESA ROYALTY TRUST/TX
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1
Chunk 6
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ursed expenses.

The terms of the Trust Indenture provide, among other things, that the Trustee may establish cash reserves and borrow funds to pay liabilities of the Trust and may pledge assets of the Trust to secure payment of the borrowings in accordance with the Trust Indenture. At any given time, the amount reserved for such future unknown contingent liabilities and expenses (the “ Contingent Reserve”) is included in cash and short-term investments.

Liability of Unitholders

The Trust unitholders are not protected from the liabilities of the Trust to the same extent that a shareholder would be protected from a corporation’s liabilities. In regard to the unitholders, the Trustee may generally be held liable for any excess liabilities incurred if the Trustee incurs any liability without ensuring that such liability will be satisfiable only out of the Trust’s assets (regardless of whether the assets are adequate to satisfy the liability) and not out of amounts distributed to, or other assets owned by, the unitholders. However, under Texas law, it is unclear whether a unitholder would be jointly and severally liable for any liability of the Trust in the event that all of the following conditions were to occur: (1) the satisfaction of such liability was not by contract limited to the assets of the Trust, (2) the assets of the Trust were insufficient to discharge such liability, and (3) the assets of the Trustee were insufficient to discharge such liability. As a result, Trust unitholders may be exposed to personal liability.

Federal Income Tax Matters

This section is a summary of federal income tax matters of general application, which addresses the material tax consequences of the ownership and sale of the Trust’s units. Except where indicated, the discussion below describes general federal income tax considerations applicable to individuals who are citizens or residents of the U. S. Accordingly, the following discussion has limited application to domestic corporations, foreign persons and persons subject to specialized federal income tax treatment, such as regulated investment companies and insurance companies. It is impractical to comment on all aspects of federal, state, local and foreign laws that may affect the tax consequences of the transactions contemplated hereby and of an investment in the units as they relate to the particular circumstances of every unitholder. Each unitholder should consult its own tax advisor with respect to its particular circumstances.

Classification of the Trust

In a technical advice memorandum dated February 26, 1982, the National Office of the Internal Revenue Service (the “ IRS”) advised the Dallas District Director that