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This excerpt taken from the SBR 10-K filed Mar 16, 2005. Florida, Mississippi, New Mexico and Oklahoma.
Florida does not have a personal
income tax. Florida imposes an income tax on resident and
nonresident corporations (except for S corporations not
subject to the built-in gains tax or passive investment income
tax), which will be applicable to royalty income allocable to a
corporate Unit holder from properties located within Florida.
Mississippi, New Mexico and Oklahoma each impose an income tax
applicable to both resident and nonresident individuals and
corporations (subject to certain exceptions for
S corporations), which will be applicable to royalty income
allocable to a Unit holder from properties located within these
states. Although the Trust may be required to file information
returns with taxing authorities in those states and provide
copies of such returns to the Unit holders, the Trust should be
considered a grantor trust for state income tax purposes and the
Royalty Properties that are located in such states should be
considered economic interests in minerals for state income tax
purposes.
Generally, the state income tax due by nonresidents in all of the aforementioned states is computed as a percentage of taxable income attributable to the particular state. By contrast, residents are taxed on their taxable income from all sources, wherever earned. Furthermore, even though state laws vary, taxable income for state purposes is often computed in a manner similar to the computation of taxable income for federal income tax purposes. Some of these states give credit for taxes paid to other states by their residents on income from sources in those other states. In certain of these states, a Unit holder is required to file a state income tax return if income is attributable to the Unit holder even though no tax is owed. 8
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