Company: MTR
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001104659-25-029944
Chunk: 9

Company: MESA ROYALTY TRUST/TX
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1
Chunk 9
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 to long-term capital gains of individuals is 20%. Moreover, this rate is subject to change by new legislation at any time. The deductibility of capital losses is subject to certain limitations. Capital gain or loss will be short-term if the unit has not been held for more than one year at the time of sale or exchange.

Additional Tax on Net Investment Income

Individuals, estates, and trusts with income above certain thresholds are subject under Section 1411 of the Code to an additional 3.8% tax  -  also known as the Net Investment Income Tax (“ NIIT”)  -  on their

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net investment income. Grantor trusts such as Mesa Royalty Trust are not subject to the NIIT; however, the unitholders may be subject to the tax. For these purposes, investment income would generally include certain income derived from investments, such as the Royalty income derived from the units and gain realized by a unitholder from a sale of the units.

Non-U. S. Unitholders

In general, a unitholder who is a nonresident alien individual or which is a foreign corporation, each a “non-U. S. unitholder” for purposes of this discussion, will be subject to tax on the gross income (without taking into account any deductions, such as depletion) produced by the Royalty at a rate equal to 30% or, if applicable, at a lower treaty rate. This tax will be withheld by the Trustee and remitted directly to the U. S. Treasury Department. A non-U. S. unitholder may elect to treat Royalty income as effectively connected with the conduct of a U. S. trade or business under provisions of the Code or pursuant to any similar provisions of applicable treaties. Upon making this election, a non-U. S. unitholder is entitled to claim all deductions with respect to that income, but he must file a U. S. federal income tax return to claim these deductions. This election once made is irrevocable unless an applicable treaty allows the election to be made annually.

The Code and the Treasury Regulations thereunder treat the publicly traded Trust as if it were a U. S. real property holding corporation. Accordingly, a non-U. S. unitholder may be subject to U. S. withholding and federal income tax on the gain on the disposition of his units if he meets certain ownership thresholds.

In addition, if a foreign corporation