Environmental

Wyoming's oil and gas royalties paid to surface estate owners (mineral rights owners) are taxed as:

ACapital gains at the federal level
BOrdinary income at the federal level and potentially subject to Wyoming excise taxes✓ Correct
CNot taxable income
DTax-exempt income under Wyoming law

Explanation

Royalty income from oil and gas is taxable as ordinary income at the federal level. Wyoming does not have a personal income tax, but Wyoming does impose severance taxes on mineral extraction. Mineral rights owners also receive 1099 forms for royalty income.

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