Frequently Asked Questions

The Ohio Department of Taxation has compiled a list of frequently asked questions covering many different categories.

To view the questions, click on the "Select Category" bar and then click on the category you are interested in.  A list of questions will appear pertaining to that category. Then click on the question you are inquiring about and the answer will appear.

Are royalties received from the use of land for mineral rights eligible for the Business Income Deduction?

Generally, royalty income received by an individual in connection with mineral rights does not fit the Ohio definition of business income, and thus is not eligible for the Business Income Deduction, unless the taxpayer can demonstrate that the income arises from the transactions or activities of the taxpayer’s trade or business, or is derived from property that is integral to the taxpayer’s trade or business.

For example, if you received royalty income from a company in exchange for the company to have the right to extract minerals from your residential, personally owned property, absent other facts and circumstances, that would not be considered business income.

However, if you manage a portfolio of mineral rights that you routinely, through the course of business transactions, acquire, trade, and manage, that could be considered business income under Ohio law, and thus would be eligible for the Business Income Deduction.  Additionally, if the mineral rights are for land that is routinely used in the operation of a trade or business (such as farming), then the royalties for those mineral rights are probably eligible for the Business Income Deduction.

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