CHAPTER 38 SENATE BILL No. 37 An Act concerning the uniform principal and income act; relating to minerals and other
natural resources; amending K.S.A. 2002 Supp. 58-9-411 and repealing the existing
section.
Be it enacted by the Legislature of the State of Kansas:

      Section  1. K.S.A. 2002 Supp. 58-9-411 is hereby amended to read as
follows: 58-9-411. (a) To the extent that a trustee accounts for receipts
from an interest in minerals or other natural resources pursuant to this
section, the trustee shall allocate them as follows:

      (1) If received as nominal delay rental or nominal annual rent on a
lease, a receipt must be allocated to income.

      (2) If received from a production payment, a receipt must be allo-
cated to income if and to the extent that the agreement creating the
production payment provides a factor for interest or its equivalent. The
balance must be allocated to principal.

      (3) If an amount received as a royalty, shut-in-well payment, take-or-
pay payment, bonus, or delay rental is more than nominal, 90 15 percent
must be allocated to principal and the balance to income.

      (4) If an amount is received from a working interest or any other
interest not provided for in subsection (1), (2), or (3), 90 15 percent of
the net amount received must be allocated to principal and the balance
to income.

      (b) An amount received on account of an interest in water that is
renewable must be allocated to income. If the water is not renewable, 90
percent of the amount must be allocated to principal and the balance to
income.

      (c) This act applies whether or not a decedent or donor was extracting
minerals, water, or other natural resources before the interest became
subject to the trust.

      (d) If a trust owns an interest in minerals, water, or other natural
resources on the effective date of this act, the trustee may allocate receipts
from the interest as provided in this act or in the manner used by the
trustee before the effective date of this act. If the trust acquires an interest
in minerals, water, or other natural resources after the effective date of
this act, the trustee shall allocate receipts from the interest as provided
in this act.

      Sec.  2. K.S.A. 2002 Supp. 58-9-411 is hereby repealed.

      Sec.  3. This act shall take effect and be in force from and after its
publication in the statute book.

Approved April 10, 2003.
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