It is the opinion of those who earn their livelihoods interpreting Internal Revenue Code tax regulations that oil and gas royalties should be treated as interests in real property for purposes of Code Section 1031, not as securities for purposes of the 1031 Code or as a partnership for purposes of Code Section 1031(a)(2)(D). Seek tax counsel to determine whether the Purchase and Sale Agreement, Management Agreement and Private Placement Memorandum between the taxpayer and sponsor marketing the mineral royalty comply with Code Section 1031.
