Company: GULTU
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001201
Chunk: 16

Company: Gulf Coast Ultra Deep Royalty Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 16
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 break-ins, cyber-attacks
and similar disruptions from unauthorized tampering, including threats that may come from external factors, such as governments, organized
crime, hackers and third parties to whom certain functions are outsourced, or may originate internally from within the respective companies.

  26  

If
a cybersecurity incident were to occur, it could potentially jeopardize the confidential, proprietary and other information processed
and stored in, and transmitted through, the computer systems and networks of the respective companies, or otherwise cause interruptions
or malfunctions in the operations of the Royalty Trust, which could result in litigation, increased costs and regulatory penalties. Despite
any steps taken by the respective companies to prevent and detect such attacks, it is possible that a cyber incident will not be discovered
for some time after it occurs, which could increase exposure to these consequences.

Risks
Related to Taxes

The
tax treatment of the Royalty Trust units is uncertain.

Although
the tax treatment of overriding royalty interests in specified developed wells that have been drilled is well developed, the law is less
developed in the area of overriding royalty interests on exploration prospects that are not classified as having proved, probable or
possible reserves and have potential well locations that may be drilled in the future. As a result, there is uncertainty as to the proper
tax treatment of the overriding royalty interests held by the Royalty Trust, and counsel is unable to express any opinion as to the proper
tax treatment as either a mineral royalty interest or a production payment. Based on the state of facts on the date on which this Form
10-K was filed, the Royalty Trust continues to treat the Royalty Trust units as mineral royalty interests for U. S. federal income tax
purposes. However, no ruling has been requested from the IRS regarding the proper treatment of the Royalty Trust units; therefore, the
IRS may assert, or a court may sustain the IRS in asserting, that the Royalty Trust units should be treated as “production payments”
that are debt instruments for U. S. federal income tax purposes subject to the Treasury Regulations applicable to contingent payment debt
instruments.

Royalty
Trust unitholders should consult their tax advisors as to the specific tax consequences of the ownership and disposition of the Royalty
Trust units, including the applicability and effect of U. S. federal, state, local and foreign income and other tax laws in light of their
particular circumstances.

The
Royalty Trust has not requested a ruling from the IRS regarding the