EX-99 4 d03817exv99.txt REPORT DATED MARCH 1, 2002 EXHIBIT 99 (SABINE ROYALTY TRUST LOGO) TAX INFORMATION 2002 This booklet contains tax information relevant to ownership of Units of Sabine Royalty Trust and should be retained. SABINE ROYALTY TRUST MARCH 1, 2003 TO UNIT HOLDERS: This booklet provides 2002 tax information which will allow you to determine your pro rata share of income and deductions attributable to your investment in Sabine Royalty Trust (the "Trust"). Each Unit holder is encouraged to read the entire booklet very carefully. The material included in this booklet enables you to compute the information to be included in your Federal and state income tax returns. This booklet is the only information source for Unit holders to determine their share of the items of income and expense of the Trust for the entire 2002 calendar year. The Trust does not file nor does it furnish a Form 1099 to Unit holders (except where Federal backup withholding is required). Unit holders should retain this booklet as part of their tax records. The material herein is not intended and should not be construed as professional tax or legal advice. Unit holders are encouraged to consult their own tax advisors concerning its use. THIS YEAR'S TAX BOOKLET CONTAINS ADDITIONAL SCHEDULES DESIGNED TO ASSIST YOU OR YOUR TAX ADVISOR IN CALCULATING THE INFORMATION TO BE INCLUDED IN YOUR FEDERAL INCOME TAX RETURNS. THOSE SCHEDULES ARE INCLUDED ON PAGES 20 THROUGH 21. WE HAVE ALSO CONSOLIDATED SOME OF THE HISTORICAL DEPLETION INFORMATION THAT IS NO LONGER APPLICABLE. Very truly yours, Sabine Royalty Trust, By Bank of America, N.A., Trustee 1-800-365-6541 SABINE ROYALTY TRUST TABLE OF CONTENTS
PAGE ---- 2002 TAX INFORMATION o Reading the Income and Expense Schedules ................................ 1 o Identifying Which Income and Expense Schedules to Use ................... 1 o Applying the Data From the Income and Expense Schedules ................. 1 o Computing Depletion ..................................................... 1 o Sale or Exchange of Units ............................................... 2 o Classification of Investment ............................................ 2 o Nonresident Foreign Unit Holders ........................................ 3 o Backup Withholding ...................................................... 3 o State Income Tax ........................................................ 3 o Table of 2002 Monthly Record Dates and Cash Distributions Per Unit ...... 4 o Tax Computation Worksheet ............................................... 5 o Supplement to Tax Computation Worksheet ................................. 6 o Tax Information Schedules ............................................... 7 o o Form 1041, Grantor Trust for Calendar Year 2002 ..................... 7 o o Form 1041, Grantor Trust for January 2002 ........................... 8 o o Form 1041, Grantor Trust for February 2002 .......................... 9 o o Form 1041, Grantor Trust for March 2002 ............................. 10 o o Form 1041, Grantor Trust for April 2002 ............................. 11 o o Form 1041, Grantor Trust for May 2002 ............................... 12 o o Form 1041, Grantor Trust for June 2002 .............................. 13 o o Form 1041, Grantor Trust for July 2002 .............................. 14 o o Form 1041, Grantor Trust for August 2002 ............................ 15 o o Form 1041, Grantor Trust for September 2002 ......................... 16 o o Form 1041, Grantor Trust for October 2002 ........................... 17 o o Form 1041, Grantor Trust for November 2002 .......................... 18 o o Form 1041, Grantor Trust for December 2002 .......................... 19 o o Supplemental Tax Table I--Gross Royalty Income ...................... 20 o o Supplemental Tax Table II--Severance Tax ............................ 20 o o Supplemental Tax Table III--Interest Income ......................... 21 o o Supplemental Tax Table IV--Trust Administrative Expense ............. 21 o o Depletion Schedule I ................................................ 22 o o Depletion Schedule II ............................................... 23 o o Depletion Schedule III .............................................. 23 o Sample Tax Forms for Individual Unit Holders ............................ 24 o Comprehensive Example ................................................... 26 Sabine Royalty Trust Historical Tax Worksheet ............................. 29 DISCUSSION OF TAX CONSIDERATIONS PERTAINING TO THE OWNERSHIP OF UNITS IN SABINE ROYALTY TRUST o Tax Background Information .............................................. A-1 o o Effect of Escrow Arrangement ........................................ A-1 o Depletion ............................................................... A-2 o o Cost Depletion ...................................................... A-2 o o Percentage Depletion ................................................ A-2 o Nonresident Foreign Unit Holders ........................................ A-3 o Sale or Exchange of Units ............................................... A-4 o Backup Withholding ...................................................... A-4 o State Income Tax ........................................................ A-4
(SRT 2002 TAX) SABINE ROYALTY TRUST 2002 TAX INFORMATION READING THE INCOME AND EXPENSE SCHEDULES The accompanying income and expense schedules reflect tax information attributable to Sabine Royalty Trust (the "Trust") for 2002. This information has been assembled on a per Unit basis and is expressed in decimal fractions of one dollar. A cumulative schedule for the twelve months ended December 31, 2002, and separate noncumulative schedules for the months of January through December 2002 are enclosed. Separate depletion schedules are enclosed which provide the necessary information for Unit holders to compute cost depletion with respect to their interests in the Trust. IDENTIFYING WHICH INCOME AND EXPENSE SCHEDULES TO USE Pursuant to the terms of the Trust agreement and the escrow agreement, the Trust receives income and incurs expenses only on Monthly Record Dates. Furthermore, only Unit holders of record on Monthly Record Dates are entitled to cash distributions. On the basis of these agreements, both cash and accrual basis Unit holders should be considered as realizing income and incurring expenses only on Monthly Record Dates. Therefore, if you were not the Unit holder of record of the Units on a specified Monthly Record Date, you should not use the tax information for the month in which that Monthly Record Date falls. A table of Monthly Record Dates and cash distributions per Unit is included on page 4. The appropriate schedules to be used by a Unit holder will depend upon (i) the date the Unit holder became a holder of record of the Units, (ii) if applicable, the date the Unit holder ceased to be the holder of record of the Units, and (iii) the tax year end of the Unit holder. For instance, a Unit holder reporting on the calendar year basis who acquired Units and became a Unit holder of record on June 15, 2002 and who still owned only those Units on December 15, 2002 must use each of the separate monthly schedules for June through December 2002, and Depletion Schedule III for such Units. However, Unit holders reporting on a calendar year basis who became Unit holders of record prior to January 16, 2002 and who continued to own only those Units on December 17, 2002, must use only the cumulative schedule for calendar year 2002 and the appropriate depletion schedule(s). APPLYING THE DATA FROM THE INCOME AND EXPENSE SCHEDULES The tax data, other than depletion, specifically applicable to a Unit holder may be determined by multiplying the appropriate decimal fractions times the number of Units owned. Unit holders who must use the separate monthly income and expense schedules should combine the individual income and expense factors from the monthly schedules for each month during which the Units were owned on a Monthly Record Date. For a worksheet approach to computing these decimal fractions, see the Supplement to Tax Computation Worksheet on page 6. COMPUTING DEPLETION Depletion schedules are included which provide information for Unit holders to compute cost depletion deductions with respect to their interests in the Trust. To compute depletion for any taxable period, Unit holders should multiply the depletion factor indicated on the relevant schedule times their original tax basis in the respective Unit(s), reduced by the cost depletion that was allowable as a deduction (whether or not deducted) in prior calendar years during which they owned the Units. A factor for percentage depletion is not included, as cost depletion exceeded the percentage depletion calculated. (SRT 2002 TAX) 1 As discussed at page A-2 in the back portion of this booklet, the composite depletion factors are determined on the basis of a weighted average ratio of current production from each Trust property to the estimated future production from such property. This method of weighting the depletion factors permits the presentation of a single depletion factor for all Unit holders acquiring Units during a period in which there is no substantial change in the relative fair market values of the Trust properties. Primarily as a result of the decline in oil prices which occurred during 1986, there was a change in the relative fair market values of the Trust properties. Accordingly, two mutually exclusive depletion computations are included herein reflecting the composite depletion factors required to compute depletion for Units acquired in 1986. The proper depletion schedule to use in computing 2002 depletion is dependent upon the date upon which the Units were acquired as reflected in the preceding paragraph. The amount of depletion attributable to a specific state may be determined by multiplying the depletion factor indicated for the particular state times the Federal tax basis in the Unit(s) held, reduced by prior calendar years' allowable Federal depletion, if any. The Federal depletion factors contained on Depletion Schedule I are presented on a cumulative basis for 2002. For depletion factors relating to the individual states, please contact the Sabine Royalty Trust. The Federal and state depletion factors contained on Depletion Schedule II are presented on a cumulative basis for 2002. However, the Federal and state depletion factors contained on Depletion Schedule III are summarized separately; and the state factors are presented on a noncumulative basis. If you are using Depletion Schedule III for your state income tax return(s), you may either calculate the applicable state depletion for each month and add the monthly depletion amounts together, or you may add together the applicable monthly depletion factors for the relevant state and multiply this created composite depletion factor times your adjusted basis in your Units. The result should be the same using either method. Different depletion schedules may be required to be used for Units acquired in different years by a Unit holder. Therefore, Unit holders are encouraged to maintain records indicating the date of acquisition and the acquisition price for each Unit or lot of Units acquired. SALE OR EXCHANGE OF UNITS A discussion concerning the tax consequences associated with the sale or exchange of Units is presented on page A-3 in the back portion of this booklet. CLASSIFICATION OF INVESTMENT Tax Reform measures enacted in 1986 and 1987 require items of income and expense to be categorized as "passive," "active" or "portfolio" in nature. An explanation of the application of these rules to the items of income and expense reported by the Trust are contained on page A-1 in the back portion of this booklet. (SRT 2002 TAX) 2 NONRESIDENT FOREIGN UNIT HOLDERS Nonresident alien individual and foreign corporation Unit holders ("Foreign Taxpayer(s)") are subject to special tax rules with respect to their investments in the Trust. These rules are outlined beginning on page A-3 in the back portion of this booklet. BACKUP WITHHOLDING Unit holders who have had amounts withheld in 2002 pursuant to the Federal backup withholding provisions should have received a Form 1099-MISC from the Trust. The Form 1099-MISC reflects the total Federal income tax withheld from distributions. The amount reported on the Form 1099-MISC should not be included as additional income in computing taxable income, as such amount is already included in the per Unit income items on the income and expense schedules. The Federal income tax withheld, as reported on the Form 1099-MISC, should be considered as a credit by the Unit holder in computing any Federal income tax liability. Individual Unit holders should include the amount of backup withholding on line 57 of page 2 of the 2002 Form 1040. For a further discussion of backup withholding, see page A-4 in the back portion of this booklet. STATE INCOME TAX Since the Trust holds royalty interests and receives income that is attributable to various states, Unit holders may be obligated to file a return and may have a tax liability in states in addition to their state of residence. The accompanying schedules have been prepared in such a manner that income and deductions attributable to the various states may be determined by each Unit holder. State income tax matters are more fully discussed on page A-4 in the back portion of this booklet. (SRT 2002 TAX) 3 TABLE OF 2002 MONTHLY RECORD DATES AND CASH DISTRIBUTIONS PER UNIT Unit holders, as reflected in the transfer books of the Trust on a Monthly Record Date, received the following per Unit cash distributions for 2002. The per Unit cash distributions reflected below have not been reduced by any taxes that may have been withheld from distributions to Foreign Taxpayers or from distributions to Unit holders subject to the Federal backup withholding rules. The distribution checks were dated and mailed on the corresponding Date Payable.
DISTRIBUTION MONTHLY RECORD DATE DATE PAYABLE PER UNIT ------------------- ------------ ------------ January 15, 2002 January 29, 2002 $.27263 February 15, 2002 February 28, 2002 $.11955 March 15, 2002 March 29, 2002 $.11574 April 15, 2002 April 29, 2002 $.21475 May 15, 2002 May 29, 2002 $.10526 June 17, 2002 June 28, 2002 $.13451 July 15, 2002 July 29, 2002 $.08743 August 15, 2002 August 29, 2002 $.25240 September 16, 2002 September 30, 2002 $.20632 October 15, 2002 October 29, 2002 $.11029 November 15, 2002 November 29, 2002 $.16117 December 16, 2002 December 30, 2002 $.09878
(SRT 2002 TAX) 4 SABINE ROYALTY TRUST TAX COMPUTATION WORKSHEET 2002 (RETAIN THIS WORKPAPER AS PART OF YOUR PERMANENT TAX RECORDS) PART I INCOME AND EXPENSE
A B C AMOUNTS PER UNIT NUMBER OF FROM APPROPRIATE UNITS OWNED SCHEDULE(S) WHERE TO REFLECT ON ITEM (NOTE 1) (NOTE 2) TOTALS 2002 FORM 1040 (NOTE 3) ---- ----------- ---------------- ------ ----------------------- Gross Royalty Income..... x = Line 4, Part I, Schedule E ----------- ---------------- ------ Severance Tax............ x = Line 16, Part I, Schedule E ----------- ---------------- ------ Interest Income.......... x = Line 1, Part I, Schedule B ----------- ---------------- ------ Administrative Expense... x = Line 18, Part I, Schedule E ----------- ---------------- ------
PART II COST DEPLETION (NOTE 4)
COST DEPLETION ALLOWABLE IN PRIOR ADJUSTED BASIS FOR APPROPRIATE 2002 CALENDAR YEARS COST DEPLETION COST DEPLETION FACTOR ORIGINAL BASIS (NOTE 5) PURPOSES (NOTE 4) 2002 COST DEPLETION* -------------- ------------------ ------------------ --------------------- -------------------- - = x = -------------- ------------------ ------------------ --------------------- --------------------
* Reflect cost depletion on 2002 Form 1040, line 20, Part 1, Schedule E (Note 3). PART III COMPUTATION OF GAIN OR (LOSS) FOR UNITS SOLD
WHERE TO REFLECT ON NET SALES ADJUSTED BASIS GAIN 2002 FORM 1040 PRICE (NOTE 6) (LOSS) (NOTE 3) --------- -------------- ------ ------------------- - = --------- -------------- ------ Form 4797
NOTES ----- (1) In order to correctly calculate total income and expense to be reported on your 2002 Federal and, if applicable, state income tax returns, it is recommended that you reproduce and complete a separate Tax Computation Worksheet for each block of Units acquired at different times. Only the total of each item of income and expense obtained by adding the separate Tax Computation Worksheet totals, if more than one is required, should be reported on your applicable 2002 income tax returns. (2) If you did not become a Unit holder of record of any Unit(s) or did not cease to be a Unit holder of record of any Unit(s) during the period from January 15, 2002 through December 16, 2002, then the amounts reflected on the cumulative schedule for 2002 should be used to complete Part I. If any Units were held of record for only part of the period defined above, the Supplement to Tax Computation Worksheet on page 6 should be used to derive the income and expense factors to be inserted in column B. (3) The Trustee believes that individual Unit holders owning the Units as an investment should report the amounts determined in this manner. The U.S. Corporation Income Tax Return (Form 1120) does not require that royalty income and related expenses be separately identified on any specific schedules. Note: Schedule D should be utilized to report the Sale of Units acquired before January 1, 1987. (See "Sale or Exchange of Units" on page A-3.) (4) The appropriate depletion schedule(s) to be utilized is generally dependent upon the date on which the Units were acquired. See "Computing Cost Depletion" on page 1 to determine the proper schedule(s) to be used. (5) Cost depletion allowable in prior calendar years cannot be computed from the schedules contained in this booklet. Depletion schedules contained in prior years' Sabine Royalty Trust Tax Information Booklet(s) should be used in order to determine the appropriate cost depletion amount(s) allowable in prior calendar years. (6) The adjusted basis is equal to the cost or other basis of the Unit(s) less the cost depletion allowable from the date of acquisition through the date of sale (whether or not deducted). (SRT 2002 TAX) 5 SABINE ROYALTY TRUST SUPPLEMENT TO TAX COMPUTATION WORKSHEET 2002 FOR UNITS HELD FOR ONLY PART OF THE YEAR This worksheet should be used by Unit holders who became holders of record of Units or ceased to be holders of record of Units during the period from January 15, 2002 through December 16, 2002. This worksheet is designed to assist Unit holders in determining the proper income and expense factors to be used on the Tax Computation Worksheet--Part I, under the heading entitled "Amounts Per Unit from Appropriate Schedule(s)". In order to complete this schedule, Unit holders should insert only the individual income and expense factors from the supplemental schedules (pages 20-21) for each month during which the Units were owned on a Monthly Record Date. (See page 4 for a list of Monthly Record Dates).
MONTH(S) DURING WHICH UNITS WERE OWNED ON A MONTHLY RECORD DATE CALCULATED ------------------------------------------------------------------------------------------------ FACTOR JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER PER UNIT* ------- -------- ----- ----- --- ---- ---- ------ --------- ------- -------- -------- ---------- Gross Royalty Income ......... ------- -------- ----- ----- --- ---- ---- ------ --------- ------- -------- -------- --------- Severance Tax ............ ------- -------- ----- ----- --- ---- ---- ------ --------- ------- -------- -------- --------- Interest Income ......... ------- -------- ----- ----- --- ---- ---- ------ --------- ------- -------- -------- --------- Administrative Expense ........ ------- -------- ----- ----- --- ---- ---- ------ --------- ------- -------- -------- ---------
---------- * This column of calculated factors per Unit should be inserted in column B of the Income and Expense section (Part I) of the Tax Computation Worksheet on page 5. (SRT 2002 TAX) 6 CUMULATIVE 2002 SABINE ROYALTY TRUST EIN 75-6297143 FORM 1041, GRANTOR TRUST Federal and State Income Tax Information See Instructions for Use SECTION I INCOME AND EXPENSE PER UNIT
OTHER INCOME ROYALTY INCOME AND EXPENSE AND EXPENSE ------------------------------------------------ ------------------------------- GROSS SEVERANCE NET ROYALTY INTEREST ADMINISTRATIVE SOURCE INCOME TAX PAYMENTS INCOME EXPENSE ------ -------------- -------------- -------------- ------------- -------------- Florida ...... $ .022917 $ .001413 $ .021504 $ * $ .001688 Louisiana .... .103813 .006818 .096995 * .009907 Mississippi .. 096301 .005629 .090672 * .008248 New Mexico ... .161440 .013764 .147676 * .013067 Oklahoma ..... .338047 .035553 .302494 * .027769 Texas ........ 1.452575 .062668 1.389907 .003150 .112889 -------------- -------------- -------------- -------------- -------------- TOTAL ... $ 2.175093 $ .125845 $ 2.049248 $ .003150 $ .173568 ============== ============== ============== ============== ==============
SECTION II RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
ITEM AMOUNT ---- ------ 1. Total Net Royalty Payments ................................... $ 2.049248 2. Interest Income .............................................. .003150 3. Administrative Expense ....................................... (.173568) ----------- 4. Cash Distribution Per Unit ** ................................ $ 1.878830 ==========
---------- * Revenue attributable to these states was invested and earned interest income. Since the investments were made in Dallas, Texas, and the interest was paid there, such interest is included in the Texas interest income. ** Includes amounts withheld by the Trust from distributions to nonresident alien individuals and foreign corporations and remitted directly to the United States Treasury. This also includes amounts withheld pursuant to the backup withholding provisions. (SRT 2002 TAX) 7 FOR JANUARY 2002 SABINE ROYALTY TRUST EIN 75-6297143 FORM 1041, GRANTOR TRUST Federal and State Income Tax Information See Instructions for Use SECTION I INCOME AND EXPENSE PER UNIT
OTHER INCOME ROYALTY INCOME AND EXPENSE AND EXPENSE ------------------------------------ -------------------------- NET GROSS SEVERANCE ROYALTY INTEREST ADMINISTRATIVE SOURCE INCOME TAX PAYMENTS INCOME EXPENSE ------ --------- --------- --------- --------- -------------- Florida ........ $ .001332 $ .000099 $ .001233 $ * $ .000038 Louisiana ...... .006293 .000605 .005688 * .000470 Mississippi .... .007293 .000476 .006817 * .000207 New Mexico ..... 021875 .001779 .020096 * .000621 Oklahoma ....... .023123 .002529 .020594 * .000656 Texas .......... .237159 .010580 .226579 .000342 .006728 --------- --------- --------- --------- ---------- TOTAL ..... $ .297075 $ .016068 $ .281007 $ .000342 $ .008720 ========= ========= ========= ========= ==========
SECTION II RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
ITEM AMOUNT ---- ------ 1. Total Net Royalty Payments ................................ $ .281007 2. Interest Income* .......................................... .000342 3. Administrative Expense .................................... (.008720) ---------- 4. Cash Distribution Per Unit ** ............................. $ .272629 ==========
---------- * Revenue attributable to these states was invested and earned interest income. Since the investments were made in Dallas, Texas, and the interest was paid there, such interest is included in the Texas interest income. ** Includes amounts withheld by the Trust from distributions to nonresident alien individuals and foreign corporations and remitted directly to the United States Treasury. This also includes amounts withheld pursuant to the backup withholding provisions. (SRT 2002 TAX) 8 FOR FEBRUARY 2002 SABINE ROYALTY TRUST EIN 75-6297143 FORM 1041, GRANTOR TRUST Federal and State Income Tax Information See Instructions for Use SECTION I INCOME AND EXPENSE PER UNIT
OTHER INCOME ROYALTY INCOME AND EXPENSE AND EXPENSE ------------------------------------ ------------------------- NET GROSS SEVERANCE ROYALTY INTEREST ADMINISTRATIVE SOURCE INCOME TAX PAYMENTS INCOME EXPENSE ------ --------- --------- --------- --------- -------------- Florida ....... $ .001418 $ .000106 $ .001312 $ * $ .000098 Louisiana ..... .007020 .000548 .006472 * .000774 Mississippi ... .004196 .000275 .003921 * .000290 New Mexico .... 012026 .001070 .010956 * .000833 Oklahoma ...... .025727 .002096 .023631 * .001781 Texas ......... .088443 .005601 .082842 .000316 .006123 --------- --------- --------- --------- --------- TOTAL ..... $ .138830 $ .009696 $ .129134 $ .000316 $ .009899 ========= ========= ========= ========= =========
SECTION II RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
ITEM AMOUNT ---- ------ 1. Total Net Royalty Payments ................................. $ .129134 2. Interest Income* ........................................... .000316 3. Administrative Expense ..................................... (.009899) ---------- 4. Cash Distribution Per Unit ** .............................. $ .119551 ==========
---------- * Revenue attributable to these states was invested and earned interest income. Since the investments were made in Dallas, Texas, and the interest was paid there, such interest is included in the Texas interest income. ** Includes amounts withheld by the Trust from distributions to nonresident alien individuals and foreign corporations and remitted directly to the United States Treasury. This also includes amounts withheld pursuant to the backup withholding provisions. (SRT 2002 TAX) 9 FOR MARCH 2002 SABINE ROYALTY TRUST EIN 75-6297143 FORM 1041, GRANTOR TRUST Federal and State Income Tax Information See Instructions for Use SECTION I INCOME AND EXPENSE PER UNIT
OTHER INCOME ROYALTY INCOME AND EXPENSE AND EXPENSE ------------------------------------ ------------------------- NET GROSS SEVERANCE ROYALTY INTEREST ADMINISTRATIVE SOURCE INCOME TAX PAYMENTS INCOME EXPENSE ------ --------- --------- --------- --------- -------------- Florida ....... $ .001381 $ .000103 $ .001278 $ * $ .000087 Louisiana ..... .007128 .000604 .006524 * .000735 Mississippi ... .006513 .000432 .006081 * .000408 New Mexico .... 009783 .000795 .008988 * .000613 Oklahoma ...... .020097 .001726 .018371 * .001260 Texas ......... .090187 .007108 .083079 .000174 .005652 --------- --------- --------- --------- --------- TOTAL ..... $ .135089 $ .010768 $ .124321 $ .000174 $ .008755 ========= ========= ========= ========= =========
SECTION II RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
ITEM AMOUNT ---- ---------- 1. Total Net Royalty Payments .................................. $ .124321 2. Interest Income* ............................................ .000174 3. Administrative Expense ...................................... (.008755) ---------- 4. Cash Distribution Per Unit** ................................ $ .115740 == ==========
---------- * Revenue attributable to these states was invested and earned interest income. Since the investments were made in Dallas, Texas, and the interest was paid there, such interest is included in the Texas interest income. ** Includes amounts withheld by the Trust from distributions to nonresident alien individuals and foreign corporations and remitted directly to the United States Treasury. This also includes amounts withheld pursuant to the backup withholding provisions. (SRT 2002 TAX) 10 FOR APRIL 2002 SABINE ROYALTY TRUST EIN 75-6297143 FORM 1041, GRANTOR TRUST Federal and State Income Tax Information See Instructions for Use SECTION I INCOME AND EXPENSE PER UNIT
OTHER INCOME ROYALTY INCOME AND EXPENSE AND EXPENSE ------------------------------------ ------------------------- NET GROSS SEVERANCE ROYALTY INTEREST ADMINISTRATIVE SOURCE INCOME TAX PAYMENTS INCOME EXPENSE ----------- --------- --------- --------- --------- -------------- Florida ....... $ .001909 $ .000100 $ .001809 $ * $ .000076 Louisiana ..... .012794 .000710 .012084 * .000777 Mississippi ... .009773 .000380 .009393 * .000423 New Mexico .... 016431 .001120 .015311 * .000703 Oklahoma ...... .034973 .002371 .032602 * .001540 Texas ......... .158031 .004498 .153533 .000273 .006737 --------- --------- --------- --------- --------- TOTAL ..... $ .233911 $ .009179 $ .224732 $ .000273 $ .010256 ========= ========= ========= ========= =========
SECTION II RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
ITEM AMOUNT ---- ---------- 1. Total Net Royalty Payments .............................. $ .224732 2. Interest Income ......................................... .000273 3. Administrative Expense .................................. (.010256) ---------- 6. Cash Distribution Per Unit ** ........................... $ .214749 ==========
* Revenue attributable to these states was invested and earned interest income. Since the investments were made in Dallas, Texas, and the interest was paid there, such interest is included in the Texas interest income. ** Includes amounts withheld by the Trust from distributions to nonresident alien individuals and foreign corporations and remitted directly to the United States Treasury. This also includes amounts withheld pursuant to the backup withholding provisions. (SRT 2002 TAX) 11 FOR MAY 2002 SABINE ROYALTY TRUST EIN 75-6297143 FORM 1041, GRANTOR TRUST Federal and State Income Tax Information See Instructions for Use SECTION I INCOME AND EXPENSE PER UNIT
OTHER INCOME ROYALTY INCOME AND EXPENSE AND EXPENSE ------------------------------------ ------------------------- NET GROSS SEVERANCE ROYALTY INTEREST ADMINISTRATIVE SOURCE INCOME TAX PAYMENTS INCOME EXPENSE ------ --------- --------- --------- --------- -------------- Florida ....... $ .001534 $ .000112 $ .001422 $ * $ .000143 Louisiana ..... .005778 .000504 .005274 * .000539 Mississippi ... .007329 .000430 .006899 * .000684 New Mexico .... 010187 .000915 .009272 * .000950 Oklahoma ...... .016349 .001127 .015222 * .001525 Texas ......... .085155 .006430 .078725 .000231 .007943 --------- --------- --------- --------- --------- TOTAL ...... $ .126332 $ .009518 $ .116814 $ .000231 $ .011784 ========= ========= ========= ========= =========
SECTION II RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
ITEM AMOUNT ---- ------ 1. Total Net Royalty Payments .............................. $ .116814 2. Interest Income ......................................... .000231 3. Administrative Expense .................................. (.011784) --------- 4. Cash Distribution Per Unit ** ........................... $ .105261 =========
---------- * Revenue attributable to these states was invested and earned interest income. Since the investments were made in Dallas, Texas, and the interest was paid there, such interest is included in the Texas interest income. ** Includes amounts withheld by the Trust from distributions to nonresident alien individuals and foreign corporations and remitted directly to the United States Treasury. This also includes amounts withheld pursuant to the backup withholding provisions. (SRT 2002 TAX) 12 FOR JUNE 2002 SABINE ROYALTY TRUST EIN 75-6297143 FORM 1041, GRANTOR TRUST Federal and State Income Tax Information See Instructions for Use SECTION I INCOME AND EXPENSE PER UNIT
OTHER INCOME ROYALTY INCOME AND EXPENSE AND EXPENSE ------------------------------------ ------------------------- NET GROSS SEVERANCE ROYALTY INTEREST ADMINISTRATIVE SOURCE INCOME TAX PAYMENTS INCOME EXPENSE ------ --------- --------- --------- --------- -------------- Florida ....... $ .000012 $ .000001 $ .000011 $ * $ .000001 Louisiana ..... .005511 .000504 .005007 * .000298 Mississippi ... .007688 .000592 .007096 * .000416 New Mexico .... 011353 .001027 .010326 * .000614 Oklahoma ...... .024534 .002528 .022006 * .001327 Texas ......... .104107 .005992 .098115 .000237 .005630 --------- --------- --------- --------- --------- TOTAL ...... $ .153205 $ .010644 $ .142561 $ .000237 $ .008286 ========= ========= ========= ========= =========
SECTION II RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
ITEM AMOUNT ---- ------ 1. Total Net Royalty Payments .................................... $ .142561 2. Interest Income ............................................... .000237 3. Administrative Expense ........................................ (.008286) --------- 4. Cash Distribution Per Unit ** ................................. $ .134512 =========
---------- * Revenue attributable to these states was invested and earned interest income. Since the investments were made in Dallas, Texas, and the interest was paid there, such interest is included in the Texas interest income. ** Includes amounts withheld by the Trust from distributions to nonresident alien individuals and foreign corporations and remitted directly to the United States Treasury. This also includes amounts withheld pursuant to the backup withholding provisions. (SRT 2002 TAX) 13 FOR JULY 2002 SABINE ROYALTY TRUST EIN 75-6297143 FORM 1041, GRANTOR TRUST Federal and State Income Tax Information See Instructions for Use SECTION I INCOME AND EXPENSE PER UNIT
OTHER INCOME ROYALTY INCOME AND EXPENSE AND EXPENSE ------------------------------------ ---------------------- NET GROSS SEVERANCE ROYALTY INTEREST ADMINISTRATIVE SOURCE INCOME TAX PAYMENTS INCOME EXPENSE ------ --------- --------- --------- --------- -------------- Florida ...... $ .004600 $ .000192 $ .004408 $ * $ .000470 Louisiana .... .008410 .000567 .007843 * .000858 Mississippi .. .006886 .000365 .006521 * .000703 New Mexico ... 009112 .000684 .008428 * .000930 Oklahoma ..... .024018 .001473 .022545 * .002452 Texas ........ .051789 .003573 .048216 .000168 .005286 --------- --------- --------- --------- --------- TOTAL ..... $ .104815 $ .006854 $ .097961 $ .000168 $ .010699 ========= ========= ========= ========= =========
SECTION II RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
ITEM AMOUNT ---- ------ 1. Total Net Royalty Payments .................................. $ .097961 2. Interest Income ............................................. .000168 3. Administrative Expense ...................................... (.010699) ---------- 4. Cash Distribution Per Unit ** ............................... $ .087430 ==========
---------- * Revenue attributable to these states was invested and earned interest income. Since the investments were made in Dallas, Texas, and the interest was paid there, such interest is included in the Texas interest income. ** Includes amounts withheld by the Trust from distributions to nonresident alien individuals and foreign corporations and remitted directly to the United States Treasury. This also includes amounts withheld pursuant to the backup withholding provisions. (SRT 2002 TAX) 14 FOR AUGUST 2002 SABINE ROYALTY TRUST EIN 75-6297143 FORM 1041, GRANTOR TRUST Federal and State Income Tax Information See Instructions for Use SECTION I INCOME AND EXPENSE PER UNIT
OTHER INCOME ROYALTY INCOME AND EXPENSE AND EXPENSE ------------------------------------ --------------------------- NET GROSS SEVERANCE ROYALTY INTEREST ADMINISTRATIVE SOURCE INCOME TAX PAYMENTS INCOME EXPENSE ------ --------- --------- --------- -------- -------------- Florida ........ $ .004199 $ .000300 $ .003899 $ * $ .000174 Louisiana ...... .010576 .000717 .009859 * .000439 Mississippi .... .011100 .000744 .010356 * .000460 New Mexico ..... 020580 .001671 .018909 * .000854 Oklahoma ....... .032725 .002980 .029745 * .001358 Texas .......... .191923 .001444 .190479 .000399 .007962 --------- --------- --------- --------- --------- TOTAL ....... $ .271103 $ .007856 $ .263247 $ .000399 $ .011247 ========= ========= ========= ========= =========
SECTION II RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
ITEM AMOUNT ---- ---------- 1. Total Net Royalty Payments ................................ $ .263247 2. Interest Income ........................................... .000399 3. Administrative Expense .................................... (.011247) ---------- 4. Cash Distribution Per Unit** .............................. $ .252399 ==========
---------- * Revenue attributable to these states was invested and earned interest income. Since the investments were made in Dallas, Texas, and the interest was paid there, such interest is included in the Texas interest income. ** Includes amounts withheld by the Trust from distributions to nonresident alien individuals and foreign corporations and remitted directly to the United States Treasury. This also includes amounts withheld pursuant to the backup withholding provisions. (SRT 2002 TAX) 15 FOR SEPTEMBER 2002 SABINE ROYALTY TRUST EIN 75-6297143 FORM 1041, GRANTOR TRUST Federal and State Income Tax Information See Instructions for Use SECTION I INCOME AND EXPENSE PER UNIT
OTHER INCOME ROYALTY INCOME AND EXPENSE AND EXPENSE ------------------------------------ ------------------------- NET GROSS SEVERANCE ROYALTY INTEREST ADMINISTRATIVE SOURCE INCOME TAX PAYMENTS INCOME EXPENSE ------ --------- --------- --------- --------- -------------- Florida ...... $ .001916 $ .000092 $ .001824 $ * $ .000071 Louisiana .... .012816 .000748 .012068 * .000472 Mississippi .. .008624 .000578 .008046 * .000318 New Mexico ... 014581 .001358 .013223 * .000537 Oklahoma ..... .051501 .004498 .047003 * .001898 Texas ........ .142255 .009881 .132374 .000322 .005244 --------- --------- --------- --------- --------- TOTAL ..... $ .231693 $ .017155 $ .214538 $ .000322 $ .008540 ========= ========= ========= ========= =========
SECTION II RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
ITEM AMOUNT ---- ---------- 1. Total Net Royalty Payments ................................ $ .214538 2. Interest Income ........................................... .000322 3. Administrative Expense .................................... (.008540) ---------- 4. Cash Distribution Per Unit ** ............................. $ .206320 ==========
---------- * Revenue attributable to these states was invested and earned interest income. Since the investments were made in Dallas, Texas, and the interest was paid there, such interest is included in the Texas interest income. ** Includes amounts withheld by the Trust from distributions to nonresident alien individuals and foreign corporations and remitted directly to the United States Treasury. This also includes amounts withheld pursuant to the backup withholding provisions. (SRT 2002 TAX) 16 FOR OCTOBER 2002 SABINE ROYALTY TRUST EIN 75-6297143 FORM 1041, GRANTOR TRUST Federal and State Income Tax Information See Instructions for Use SECTION I INCOME AND EXPENSE PER UNIT
OTHER INCOME ROYALTY INCOME AND EXPENSE AND EXPENSE ------------------------------------- -------------------------- NET GROSS SEVERANCE ROYALTY INTEREST ADMINISTRATIVE SOURCE INCOME TAX PAYMENTS INCOME EXPENSE ------ --------- ---------- --------- --------- -------------- Florida ........ $ .000014 $ (.000002) $ .000016 $ * $ .000004 Louisiana ...... 008792 .000463 .008329 * .002791 Mississippi .... .008075 .000446 .007629 * .002563 New Mexico ..... .013072 .001181 .011891 * .004150 Oklahoma ....... .025549 .002018 .023531 * .008111 Texas .......... 113231 .001032 .112199 .000259 .035946 --------- ---------- --------- --------- --------- TOTAL ....... $ .168733 $ .005138 $ .163595 $ .000259 $ .053565 ========= ========== ========= ========= =========
SECTION II RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
ITEM AMOUNT ---- ---------- 1. Total Net Royalty Payments ................................. $ .163595 2. Interest Income ............................................ .000259 3. Administrative Expense ..................................... (.053565) ---------- 4. Cash Distribution Per Unit** ............................... $ .110289 ==========
---------- * Revenue attributable to these states was invested and earned interest income. Since the investments were made in Dallas, Texas, and the interest was paid there, such interest is included in the Texas interest income. ** Includes amounts withheld by the Trust from distributions to nonresident alien individuals and foreign corporations and remitted directly to the United States Treasury. This also includes amounts withheld pursuant to the backup withholding provisions. (SRT 2002 TAX) 17 FOR NOVEMBER 2002 SABINE ROYALTY TRUST EIN 75-6297143 FORM 1041, GRANTOR TRUST Federal and State Income Tax Information See Instructions for Use SECTION I INCOME AND EXPENSE PER UNIT
OTHER INCOME ROYALTY INCOME AND EXPENSE AND EXPENSE ------------------------------------ ------------------------- NET GROSS SEVERANCE ROYALTY INTEREST ADMINISTRATIVE SOURCE INCOME TAX PAYMENTS INCOME EXPENSE ------ --------- --------- --------- --------- -------------- Florida ....... $ .004283 $ .000293 $ .003990 $ * $ .000502 Louisiana ..... .008142 .000551 .007591 * .000955 Mississippi ... .008463 .000492 .007971 * .000992 New Mexico .... 013573 .001490 .012083 * .001591 Oklahoma ...... .032750 .003432 .029318 * .003840 Texas ......... .125961 .003323 .122638 .000227 .014768 --------- --------- --------- --------- --------- TOTAL ...... $ .193172 $ .009581 $ .183591 $ .000227 $ .022648 ========= ========= ========= ========= =========
SECTION II RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
ITEM AMOUNT ---- ---------- 1. Total Net Royalty Payments ................................. $ .183591 2. Interest Income ............................................ .000227 3. Administrative Expense .................................... (.022648) ---------- 4. Cash Distribution Per Unit** ............................... $ .161170 ==========
---------- * Revenue attributable to these states was invested and earned interest income. Since the investments were made in Dallas, Texas, and the interest was paid there, such interest is included in the Texas interest income. ** Includes amounts withheld by the Trust from distributions to nonresident alien individuals and foreign corporations and remitted directly to the United States Treasury. This also includes amounts withheld pursuant to the backup withholding provisions. (SRT 2002 TAX) 18 FOR DECEMBER 2002 SABINE ROYALTY TRUST EIN 75-6297143 FORM 1041, GRANTOR TRUST Federal and State Income Tax Information See Instructions for Use SECTION I INCOME AND EXPENSE PER UNIT
OTHER INCOME ROYALTY INCOME AND EXPENSE AND EXPENSE ------------------------------------ ------------------------- NET GROSS SEVERANCE ROYALTY INTEREST ADMINISTRATIVE SOURCE INCOME TAX PAYMENTS INCOME EXPENSE ------ --------- --------- --------- --------- -------------- Florida ....... $ .000319 $ .000017 $ .000302 $ * $ .000024 Louisiana ..... .010553 .000297 .010256 * .000799 Mississippi ... .010361 .000419 .009942 * .000784 New Mexico .... 008867 .000674 .008193 * .000671 Oklahoma ...... .026701 .008775 .017926 * .002021 Texas ......... .064334 .003206 .061128 .000202 .004870 --------- --------- --------- --------- --------- TOTAL ...... $ .121135 $ .013388 $ .107747 $ .000202 $ .009169 ========= ========= ========= ========= =========
SECTION II RECONCILIATION OF CASH DISTRIBUTIONS PER UNIT
ITEM AMOUNT ---- --------- 1. Total Net Royalty Payments................................... $ .107747 2. Interest Income.............................................. .000202 3. Administrative Expense....................................... (.009169) --------- 4. Cash Distribution Per Unit**................................. $ .098780 =========
---------- * Revenue attributable to these states was invested and earned interest income. Since the investments were made in Dallas, Texas, and the interest was paid there, such interest is included in the Texas interest income. ** Includes amounts withheld by the Trust from distributions to nonresident alien individuals and foreign corporations and remitted directly to the United States Treasury. This also includes amounts withheld pursuant to the backup withholding provisions. (SRT 2002 TAX) 19 SABINE ROYALTY TRUST TABLE I 2002 GROSS ROYALTY INCOME (CUMULATIVE $ PER UNIT)
FOR A UNIT ACQUIRED OF RECORD DURING THE AND THE LAST CASH DISTRIBUTION ON SUCH UNIT WAS ATTRIBUTABLE TO THE MONTHLY RECORD DATE MONTH OF: FOR THE MONTH OF: --------- ------------------------------------------------------------------------------------------------------------------------ 2002 ------------------------------------------------------------------------------------------------------------------------ JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER -------- -------- -------- -------- -------- -------- -------- -------- --------- -------- -------- -------- January ... 0.297075 0.435905 0.570994 0.804905 0.931237 1.084442 1.189257 1.460360 1.692053 1.860786 2.053958 2.175093 February .. -- 0.138830 0.273919 0.507830 0.634162 0.787367 0.892182 1.163285 1.394978 1.563711 1.756883 1.878018 March ..... -- -- 0.135089 0.369000 0.495332 0.648537 0.753352 1.024455 1.256148 1.424881 1.618053 1.739188 April ..... -- -- -- 0.233911 0.360243 0.513448 0.618263 0.889366 1.121059 1.289792 1.482964 1.604099 May ....... -- -- -- -- 0.126332 0.279537 0.384352 0.655455 0.887148 1.055881 1.249053 1.370188 June ...... -- -- -- -- -- 0.153205 0.258020 0.529123 0.760816 0.929549 1.122721 1.243856 July ...... -- -- -- -- -- -- 0.104815 0.375918 0.607611 0.776344 0.969516 1.090651 August .... -- -- -- -- -- -- -- 0.271103 0.502796 0.671529 0.864701 0.985836 September . -- -- -- -- -- -- -- -- 0.231693 0.400426 0.593598 0.714733 October ... -- -- -- -- -- -- -- -- -- 0.168733 0.361905 0.483040 November .. -- -- -- -- -- -- -- -- -- -- 0.193172 0.314307 December .. -- -- -- -- -- -- -- -- -- -- -- 0.121135
TABLE II 2002 SEVERANCE TAX (CUMULATIVE $ PER UNIT)
FOR A UNIT ACQUIRED OF RECORD DURING THE AND THE LAST CASH DISTRIBUTION ON SUCH UNIT WAS ATTRIBUTABLE TO THE MONTHLY RECORD DATE MONTH OF: FOR THE MONTH OF: --------- ---------------------------------------------------------------------------------------------------------------------- 2002 ---------------------------------------------------------------------------------------------------------------------- JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER -------- -------- -------- -------- -------- -------- -------- -------- --------- -------- -------- -------- January.... 0.016068 0.025764 0.036532 0.045711 0.055229 0.065873 0.072727 0.080583 0.097738 0.102876 0.112457 0.125845 February... -- 0.009696 0.020464 0.029643 0.039161 0.049805 0.056659 0.064515 0.081670 0.086808 0.096389 0.109777 March...... -- -- 0.010768 0.019947 0.029465 0.040109 0.046963 0.054819 0.071974 0.077112 0.086693 0.100081 April...... -- -- -- 0.009179 0.018697 0.029341 0.036195 0.044051 0.061206 0.066344 0.075925 0.089313 May........ -- -- -- -- 0.009518 0.020162 0.027016 0.034872 0.052027 0.057165 0.066746 0.080134 June....... -- -- -- -- -- 0.010644 0.017498 0.025354 0.042509 0.047647 0.057228 0.070616 July....... -- -- -- -- -- -- 0.006854 0.014710 0.031865 0.037003 0.046584 0.059972 August..... -- -- -- -- -- -- -- 0.007856 0.025011 0.030149 0.039730 0.053118 September.. -- -- -- -- -- -- -- -- 0.017155 0.022293 0.031874 0.045262 October.... -- -- -- -- -- -- -- -- -- 0.005138 0.014719 0.028107 November... -- -- -- -- -- -- -- -- -- -- 0.009581 0.022969 December... -- -- -- -- -- -- -- -- -- -- -- 0.013388
(SRT 2002 TAX) 20 SABINE ROYALTY TRUST TABLE III 2002 INTEREST INCOME (CUMULATIVE $ PER UNIT)
FOR A UNIT ACQUIRED OF RECORD DURING THE AND THE LAST CASH DISTRIBUTION ON SUCH UNIT WAS MONTH OF: ATTRIBUTABLE TO THE MONTHLY RECORD DATE FOR THE MONTH OF: --------- ---------------------------------------------------------------------------------------------------------------------- 2002 ---------------------------------------------------------------------------------------------------------------------- JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- January .... 0.000342 0.000658 0.000832 0.001105 0.001336 0.001573 0.001741 0.002140 0.002462 0.002721 0.002948 0.003150 February ... -- 0.000316 0.000490 0.000763 0.000994 0.001231 0.001399 0.001798 0.002120 0.002379 0.002606 0.002808 March ...... -- -- 0.000174 0.000447 0.000678 0.000915 0.001083 0.001482 0.001804 0.002063 0.002290 0.002492 April ...... -- -- -- 0.000273 0.000504 0.000741 0.000909 0.001308 0.001630 0.001889 0.002116 0.002318 May ........ -- -- -- -- 0.000231 0.000468 0.000636 0.001035 0.001357 0.001616 0.001843 0.002045 June ....... -- -- -- -- -- 0.000237 0.000405 0.000804 0.001126 0.001385 0.001612 0.001814 July ....... -- -- -- -- -- -- 0.000168 0.000567 0.000889 0.001148 0.001375 0.001577 August ..... -- -- -- -- -- -- -- 0.000399 0.000721 0.000980 0.001207 0.001409 September .. -- -- -- -- -- -- -- -- 0.000322 0.000581 0.000808 0.001010 October .... -- -- -- -- -- -- -- -- -- 0.000259 0.000486 0.000688 November ... -- -- -- -- -- -- -- -- -- -- 0.000227 0.000429 December ... -- -- -- -- -- -- -- -- -- -- -- 0.000202
TABLE IV 2002 TRUST ADMINISTRATIVE EXPENSE (CUMULATIVE $ PER UNIT)
FOR A UNIT ACQUIRED OF RECORD DURING THE AND THE LAST CASH DISTRIBUTION ON SUCH UNIT WAS MONTH OF: ATTRIBUTABLE TO THE MONTHLY RECORD DATE FOR THE MONTH OF: --------- ---------------------------------------------------------------------------------------------------------------------- 2002 ---------------------------------------------------------------------------------------------------------------------- JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER -------- -------- -------- -------- -------- -------- -------- -------- --------- -------- -------- -------- January.... 0.008720 0.018619 0.027374 0.037630 0.049414 0.057700 0.068399 0.079646 0.088186 0.141751 0.164399 0.173568 February... -- 0.009899 0.018654 0.028910 0.040694 0.048980 0.059679 0.070926 0.079466 0.133031 0.155679 0.164848 March...... -- -- 0.008755 0.019011 0.030795 0.039081 0.049780 0.061027 0.069567 0.123132 0.145780 0.154949 April...... -- -- -- 0.010256 0.022040 0.030326 0.041025 0.052272 0.060812 0.114377 0.137025 0.146194 May........ -- -- -- -- 0.011784 0.020070 0.030769 0.042016 0.050556 0.104121 0.126769 0.135938 June....... -- -- -- -- -- 0.008286 0.018985 0.030232 0.038772 0.092337 0.114985 0.124154 July....... -- -- -- -- -- -- 0.010699 0.021946 0.030486 0.084051 0.106699 0.115868 August..... -- -- -- -- -- -- -- 0.011247 0.019787 0.073352 0.096000 0.105169 September.. -- -- -- -- -- -- -- -- 0.008540 0.062105 0.084753 0.093922 October.... -- -- -- -- -- -- -- -- -- 0.053565 0.076213 0.085382 November... -- -- -- -- -- -- -- -- -- -- 0.022648 0.031817 December... -- -- -- -- -- -- -- -- -- -- -- 0.009169
(SRT 2002 TAX) 21 SABINE ROYALTY TRUST DEPLETION SCHEDULE I The cumulative federal depletion factors reflected in Depletion Schedule I should be used to compute 2002 federal depletion amounts attributable to Units purchased for which the Unit holder initially became entitled to distributions in the year stated. For depletion factors relating to the individual states, please contact the Sabine Royalty Trust. (See accompanying information for computation instructions.)
FOR A UNIT ACQUIRED OF RECORD DURING THE YEAR OF: LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 2002 -------------- ------------------------------------------------------------------------------------------------------------ JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER -------- -------- -------- -------- -------- -------- -------- -------- --------- -------- -------- -------- ORIGINAL DISTRIBUTION ... 0.021263 0.031762 0.042927 0.057591 0.067702 0.079880 0.086137 0.103627 0.116710 0.127827 0.140686 0.147848 1983 ........... 0.022057 0.032580 0.043651 0.057902 0.067821 0.079586 0.085139 0.102578 0.114919 0.125493 0.138082 0.144671 1984 ........... 0.018782 0.027712 0.037127 0.049230 0.057661 0.067630 0.072325 0.087149 0.097596 0.106550 0.117236 0.122841 1985 ........... 0.021044 0.031017 0.041529 0.055047 0.064488 0.075641 0.080879 0.097476 0.109098 0.119077 0.130999 0.137258 BEFORE MARCH 17, 1986 ........... 0.019366 0.028520 0.038165 0.050555 0.059218 0.069440 0.074215 0.089455 0.100080 0.109211 0.120140 0.125860 AFTER MARCH 17, 1986 ........... 0.017286 0.025465 0.034079 0.045144 0.052889 0.062025 0.066302 0.079913 0.089408 0.097566 0.107323 0.112440 1987 ........... 0.019775 0.029139 0.038995 0.051658 0.060509 0.070959 0.075855 0.091427 0.102306 0.111647 0.122828 0.128668 1988 ........... 0.020180 0.029816 0.039932 0.052954 0.062014 0.072773 0.077846 0.093795 0.105082 0.114752 0.126274 0.132267 1989 ........... 0.019579 0.029031 0.038939 0.051747 0.060598 0.071195 0.076267 0.091853 0.103079 0.112670 0.124028 0.129926 1990 ........... 0.019148 0.028418 0.038115 0.050640 0.059310 0.069684 0.074668 0.089918 0.100923 0.110315 0.121433 0.127199 1991 ........... 0.018375 0.027413 0.036787 0.048920 0.057339 0.067463 0.072405 0.087131 0.097938 0.107121 0.117907 0.123506 1992 ........... 0.019115 0.028703 0.038577 0.051447 0.060259 0.071054 0.076356 0.091805 0.103497 0.113408 0.124893 0.130784 1993 ........... 0.019210 0.028879 0.038833 0.051785 0.060695 0.071551 0.076978 0.092550 0.104343 0.114303 0.125880 0.131841 1994 ........... 0.018137 0.027326 0.036810 0.049158 0.057614 0.067914 0.073176 0.087969 0.099283 0.108795 0.119872 0.125574 1995 ........... 0.018397 0.027778 0.037451 0.050076 0.058701 0.069222 0.074747 0.089872 0.101493 0.111229 0.122624 0.128431 1996 ........... 0.017572 0.026803 0.036231 0.048627 0.056962 0.067351 0.072871 0.087499 0.099228 0.109005 0.120254 0.125916 1997 ........... 0.020165 0.030538 0.041217 0.055163 0.064660 0.076283 0.082409 0.099034 0.111981 0.122801 0.135396 0.141826 1998 ........... 0.020533 0.031086 0.041999 0.056293 0.066020 0.077939 0.084235 0.101225 0.114475 0.125567 0.138420 0.145083 1999 ........... 0.020694 0.031366 0.042504 0.057028 0.067033 0.079093 0.085589 0.102778 0.116257 0.127484 0.140415 0.147471 2000 ........... 0.020477 0.031011 0.042046 0.056506 0.066516 0.078572 0.085142 0.102267 0.115621 0.126773 0.139591 0.146703
22 SABINE ROYALTY TRUST DEPLETION SCHEDULE II The cumulative depletion factors reflected in Depletion Schedule II should be used to compute 2002 federal and state depletion amounts attributable to Units purchased for which the Unit holder initially became entitled to distributions in 2001. This schedule should not be used to compute depletion for any other Units owned. (See accompanying information for computation instructions.)
LAST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 2002 --------------------------------------------------------------------------------------------------------------- JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- -------- FEDERAL DEPLETION FACTOR .......... .018868 .029379 .040312 .054728 .064639 .076704 .083883 .100361 .114544 .126101 .138901 .146372 ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= STATE DEPLETION FACTORS Florida ......... .000059 .000118 .000179 .000235 .000297 .000298 .000483 .000616 .000683 .000684 .000821 .000831 Louisiana ....... 000840 .001693 .002740 .003884 .004807 .005518 .006433 .007430 .008951 .009911 .010839 .011966 Mississippi ..... .000955 .001325 .001970 .003000 .003800 .004669 .005403 .006562 .007292 .007962 .008669 .009539 New Mexico ...... .001608 .002613 .003417 .004454 .005405 .006546 .007188 .008548 .009640 .010532 .011427 .011953 Oklahoma ........ .002274 .004566 .006625 .009779 .011256 .014073 .015898 .018655 .022902 .026258 .029382 .030658 Texas ........... 013132 .019064 .025381 .033376 .039074 .045600 .048478 .058550 .065076 .070754 .077763 .081425
DEPLETION SCHEDULE III The cumulative depletion factors reflected in Depletion Schedule III should be used to compute 2002 federal and state depletion amounts attributable to Units purchased for which the Unit holder initially became entitled to distributions in 2002. This schedule should not be used to compute depletion for any other Units owned. (See accompanying information for computation instructions.)
FIRST MONTH IN WHICH UNITS WERE OWNED ON THE MONTHLY RECORD DATE IN 2002 JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER -------------- ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- ------- -------- January ...... .019805 .030415 .041404 .055761 .065728 .077717 .084613 .101457 .115168 .126425 .139264 .146419 February ..... -- .010610 .021599 .035956 .045923 .057912 .064808 .081652 .095363 .106620 .119459 .126614 March ........ -- -- .010989 .025346 .035313 .047302 .054198 .071042 .084753 .096010 .108849 .116004 April ........ -- -- -- .014357 .024324 .036313 .043209 .060053 .073764 .085021 .097860 .105015 May .......... -- -- -- -- .009967 .021956 .028852 .045696 .059407 .070664 .083503 .090658 June ......... -- -- -- -- -- .011989 .018885 .035729 .049440 .060697 .073536 .080691 July ......... -- -- -- -- -- -- .006896 .023740 .037451 .048708 .061547 .068702 August ....... -- -- -- -- -- -- -- .016844 .030555 .041812 .054651 .061806 September .... -- -- -- -- -- -- -- -- .013711 .024968 .037807 .044962 October ...... -- -- -- -- -- -- -- -- -- .011257 .024096 .031251 November ..... -- -- -- -- -- -- -- -- -- -- .012839 .019994 December ..... -- -- -- -- -- -- -- -- -- -- -- .007155
STATE DEPLETION FACTORS JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER --------------- ------- -------- ------- ------- ------- ------- ------- ------- --------- ------- -------- -------- Florida ....... .000105 .000106 .000110 .000101 .000112 .000001 .000333 .000238 .000121 .000001 .000245 .000019 Louisiana ..... .000588 .000598 .000734 .000801 .000647 .000498 .000641 .000699 .001066 .000673 .000650 .000789 Mississippi ... .000652 .000253 .000440 .000703 .000546 .000593 .000501 .000791 .000498 .000457 .000483 .000594 New Mexico .... .001577 .000985 .000788 .001016 .000932 .001118 .000629 .001333 .001070 .000874 .000877 .000516 Oklahoma ...... 001872 .001887 .001695 .002597 .001216 .002319 .001502 .002270 .003497 .002762 .002572 .001050 Texas ......... .015011 .006781 .007222 .009139 .006514 .007460 .003290 .011513 .007459 .006490 .008012 .004187 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- TOTAL ......... .019805 .010610 .010989 .014357 .009967 .011989 .006896 .016844 .013711 .011257 .012839 .007155 ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
(SRT 2002 TAX) 23 SAMPLE TAX FORMS FOR INDIVIDUAL UNIT HOLDERS SCHEDULE E SUPPLEMENTAL INCOME AND LOSS OMB No. 1545-0074 (FORM 1040) (FROM RENTAL REAL ESTATE, ROYALTIES, PARTNERSHIPS, 2002 S CORPORATIONS, ESTATES, TRUSTS, REMICS, ETC.) Attachment Department of the Treasury Sequence No. 13 Internal Revenue Service (99) > ATTACH TO FORM 1040 OR FORM 1041 > SEE INSTRUCTIONS FOR SCHEDULE E (FORM 1040). Name(s) shown on return YOUR SOCIAL SECURITY NUMBER -------------------------------------------------------------------------- ------- ------- ------- -------------------------------------------------------------------------------------------------------------- PART I INCOME OR LOSS FROM RENTAL REAL ESTATE AND ROYALTIES NOTE. If you are in the business of renting personal property, use SCHEDULE C or C-EZ (see page E-3). Report farm rental income or loss from FORM 4835 on page 2, line 39. 1. Show the kind and location of each RENTAL REAL ESTATE PROPERTY: 2 For each rental real YES NO estate property listed on --- -- A line 1, did you or your ---------------------------------------------------------------- family use it during the tax year for personal purposes for more than B the greater of: A --- --- ----------------------------------------------------------------- o 14 days OR o 10% of the total days B --- --- rented at fair rental C value? ----------------------------------------------------------------- (See page E-3.) C --- --- -------------------------------------------------------------------------------------------------------------- PROPERTIES TOTALS INCOME: A B C (Add columns A, B, and C.) 3 Rents received......................... 3 3 GROSS ROYAL ----- ----- ----- ---------- INCOME-----------> 4 Royalties received .................... 4 4 ----- ----- ----- ---------- EXPENSES: 5 Advertising............................ 5 ----- ----- ----- 6 Auto and travel (see page E-4)......... 6 ----- ----- ----- 7 Cleaning and maintenance............... 7 ----- ----- ----- 8 Commissions............................ 8 ----- ----- ----- 9 Insurance.............................. 9 ----- ----- ----- 10 Legal and other professional fees......10 ----- ----- ----- 11 Management fees........................11 ----- ----- ----- 12 Mortgage interest paid to banks, etc. (see page E-4)....................12 12 ----- ----- ----- ---------- 13 Other interest.........................13 ----- ----- ----- 14 Repairs................................14 ----- ----- ----- 15 Supplies...............................15 ----- ----- ----- SEVERANCE TAX----> 16 Taxes..................................16 ----- ----- ----- 17 Utilities..............................17 ADMINISTRATIVE ----- ----- ----- EXPENSES---------> 18 Other (list) > ----- ----- ----- 18 ----- ----- ----- 19 Add lines 5 through 18.................19 19 ----- ----- ----- ---------- DEPLETION--------> 20 Depreciation expense or depletion (see page E-4).........................20 20 ----- ----- ----- ---------- 21 Total expenses. Add lines 19 and 20....21 ----- ----- ----- 22 Income or (loss) from rental real estate or royalty properties. Subtract line 21 from line 3 (rents) or line 4 (royalties). If the result is a (loss), see page E-5 to find out if you must file FORM 6198......... 22 ----- ----- ----- 23 Deductible rental real estate loss. CAUTION. Your rental real estate loss on line 22 may be limited. See page E-5 to find out if you must file FORM 8582. Real estate professionals must complete line 42 on page 2........................... 23( ) ( ) ( ) ----- ----- ----- 24 INCOME. Add positive amounts shown on line 22. DO NOT include any losses.............................................................. 24 25 LOSSES. Add royalty losses from line 22 and rental real estate ---------- losses from line 23. Enter total losses here............................ 25 ( ) ---------- 26 TOTAL RENTAL REAL ESTATE AND ROYALTY INCOME OR (LOSS). Combine lines 24 and 25. Enter the result here. If Parts II, III, IV, and line 39 on page 2 do not apply to you, also enter this amount on Form 1040, line 17. Otherwise, include this amount in the total on line 40 on page 2....................................... 26 ---------- ------------------------------------------------------------------------------------------------------------- FOR PAPERWORK REDUCTION ACT NOTICE, SEE FORM 1040 INSTRUCTIONS. Cat. No. 11344L SCHEDULE E (FORM 1040) 2002
24 SAMPLE TAX FORMS FOR INDIVIDUAL UNIT HOLDERS Schedules A&B (Form 1040) 2002 OMB No. 1545-0074 Page 2 Name(s) shown on Form 1040. Do not enter name and social security number if shown on other side. YOUR SOCIAL SECURITY NUMBER ---------------------------------------------------------------------------- -------- ------- ------- -------------------------------------------------------------------------------------------------------------- Attachment SCHEDULE B--INTEREST AND ORDINARY DIVIDENDS Sequence No. 08 -------------------------------------------------------------------------------------------------------------- PART I 1 List name of payer. If any interest is from a seller-financed AMOUNT INTEREST mortgage and the buyer used the property as a personal (See page B-1 residence, see page B-1 and list this interest first. Also, and the show that buyer's social security number and address >........... instructions for ................................................................. Form 1040, ................................................................. line 8a.) ................................................................. INTEREST INCOME---> ................................................................. ................................................................. 1 ................................................................. ----------- NOTE. If you ................................................................. received a Form ................................................................. 1099-INT, Form ................................................................. 1099-OID, or ................................................................. substitute ................................................................. statement ................................................................. from a brokerage ................................................................. firm, list the ................................................................. firm's name as ................................................................. the payer and ................................................................. enter the total ................................................................. interest shown 2 Add the amounts on line 1........................................ 2 ----------- on that form. 3 Excludable interest on series EE and I U.S. savings bonds issued after 1989 from Form 8815, line 14. You MUST attach Form 8815.... 3 ----------- 4 Subtract line 3 from line 2. Enter the result here and on Form 1040, line 8a >................................................... 4 --------------------------------------------------------------------- ----------- NOTE. If line 4 is over $1,500, you must complete Part III. -------------------------------------------------------------------------------------------------------------- 5 List name of payer. Include only ordinary dividends. If you AMOUNT received any capital gain distributions, see the instructions for Form 1040, line 13 >......................................... PART II ................................................................. ORDINARY ................................................................. DIVIDENDS ................................................................. (See page B-1 ................................................................. and the ................................................................. instructions ................................................................. for Form 1040, ................................................................. line 9.) ................................................................. ................................................................. NOTE. If you ................................................................. 5 received a Form ................................................................. ----------- 1099-DIV or ................................................................. substitute ................................................................. statement from ................................................................. a brokerage ................................................................. firm, list the ................................................................. firm's name as ................................................................. the payer and ................................................................. enter the ................................................................. ordinary ................................................................. dividends shown ................................................................. on that form. ................................................................. 6 Add the amounts on line 5. Enter the total here and on Form 1040, line 9 >................................................... 6 ----------------------------------------------------------------------------------------- NOTE. If line 6 is over $1,500, you must complete Part III. -------------------------------------------------------------------------------------------------------------- PART III You must complete this part if you (A) had over $1,500 of taxable YES NO FOREIGN ACCOUNTS interest or ordinary dividends; OR (B) had a foreign account; or AND TRUSTS (C) received a distribution from, or were a grantor of, or a transferor to, a foreign trust. ----------------------------------------------------------------------------------------- (See 7A At any time during 2002, did you have an interest in or a page B-2.) signature or other authority over a financial account in a foreign country, such as a bank account, securities account, or other financial account? See page B-2 for exceptions and filing requirements for Form TD F 90-22.1................................ B If "Yes," enter the name of the foreign country >............... 8 During 2002, did you receive a distribution from, or were you the grantor of, or transferor to, a foreign trust? If "Yes," you may have to file Form 3520. See page B-2.......................... ------------------------------------------------------------------------------------------------------------------------------------ FOR PAPERWORK REDUCTION ACT NOTICE, SEE FORM 1040 INSTRUCTIONS. SCHEDULE B (FORM 1040) 2002
25 COMPREHENSIVE EXAMPLE 1 The following example illustrates the computations necessary for an individual to determine income and expense attributable to Units acquired in March of 1984 and held throughout 2002. COMPUTATION OF INCOME AND EXPENSE FOR UNITS OWNED ON ALL MONTHLY RECORD DATES IN 2001 SABINE ROYALTY TRUST TAX COMPUTATION WORKSHEET 2002 (RETAIN THIS WORKPAPER AS PART OF YOUR PERMANENT TAX RECORDS) PART I INCOME AND EXPENSE
A B C AMOUNTS PER UNIT NUMBER OF FROM APPROPRIATE UNITS OWNED SCHEDULE(S) WHERE TO REFLECT ON ITEM (NOTE 1) (NOTE 2) TOTALS 2002 FORM 1040 (NOTE 3) ---- ----------- ---------------- ------ ----------------------- Gross Royalty Income..... 100 x $2.175093 = $217.51 Line 4, Part I, Schedule E ----- --------- ------- Severance Tax............ 100 x $ .125845 = $ 12.59 Line 16, Part I, Schedule E ----- --------- ------- Interest Income.......... 100 x $ .003150 = $ .32 Line 1, Part I, Schedule B ----- --------- ------- Administrative Expense... 100 x $ .173568 = $ 17.36 Line 18, Part I, Schedule E ----- --------- -------
PART II COST DEPLETION (NOTE 4)
COST DEPLETION ALLOWABLE IN PRIOR ADJUSTED BASIS FOR CALENDAR YEARS COST DEPLETION APPROPRIATE 2002 ORIGINAL BASIS (NOTE 5) PURPOSES COST DEPLETION FACTOR 2002 COST DEPLETION* -------------- ------------------ ------------------ --------------------- -------------------- $2,100.00 $1,961.09 = $138.91 x .122841 = $17.07 --------- --------- ------- ------- ------
*Reflect cost depletion on 2002 Form 1040, line 20, Part 1, Schedule E (Note 3). PART III COMPUTATION OF GAIN OR (LOSS) FOR UNITS SOLD
WHERE TO REFLECT ON NET SALES ADJUSTED BASIS GAIN 2002 FORM 1040 PRICE (NOTE 6) (LOSS) (NOTE 3) --------- -------------- ------ ------------------- Not Applicable - -- = -- Form 4797 -------------- ------- -------
See Page 5 for Applicable Notes. (SRT 2002 TAX) 26 COMPREHENSIVE EXAMPLE 2 The following example illustrates the computations necessary for an individual to determine income and expenses and gain or loss on units disposed of during 2002.
ACQUISITION UNITS ORIGINAL SALES UNITS SALES DATE ACQUIRED BASIS DATE SOLD PRICE ----------- -------- -------- ----- ----- ----- 03-21-84 100 $2,100.00 04-3-02 100 $1,275.00
COMPUTATION OF INCOME AND EXPENSE FOR UNITS SOLD IN 2001 SABINE ROYALTY TRUST TAX COMPUTATION WORKSHEET 2002 (RETAIN THIS WORKPAPER AS PART OF YOUR PERMANENT TAX RECORDS) PART I INCOME AND EXPENSE
A B C AMOUNTS PER UNIT NUMBER OF FROM APPROPRIATE UNITS OWNED SCHEDULE(S) WHERE TO REFLECT ON ITEM (NOTE 1) (NOTE 2) TOTALS 2002 FORM 1040 (NOTE 3) ---- ----------- ---------------- ------ ----------------------- Gross Royalty Income ...... 100 x $.570994 = $57.10 Line 4, Part I, Schedule E ---- -------- ------ Severance Tax ............. 100 x $.036532 = $ 3.66 Line 16, Part I, Schedule E ---- -------- ------ Interest Income ........... 100 x $.000832 = $ .84 Line 1, Part I, Schedule B ---- -------- ------ Administrative Expense .... 100 x $.027374 = $ 2.74 Line 18, Part I, Schedule E ---- -------- ------
PART II COST DEPLETION (NOTE 4)
COST DEPLETION ALLOWABLE IN PRIOR ADJUSTED BASIS FOR CALENDAR YEARS COST DEPLETION APPROPRIATE 2002 ORIGINAL BASIS (NOTE 5) PURPOSES COST DEPLETION FACTOR 2002 COST DEPLETION* -------------- ------------------ ------------------ --------------------- -------------------- $2,100.00 - $1,961.09 = $138.91 x .037127 = $5.16 --------- --------- ------- ------- -----
*Reflect cost depletion on 2002 Form 1040, line 20, Part 1, Schedule E (Note 3). PART III COMPUTATION OF GAIN OR (LOSS) FOR UNITS SOLD
WHERE TO REFLECT ON ADJUSTED BASIS GAIN 2002 FORM 1040 NET SALES PRICE (NOTE 6) (LOSS) (NOTE 3) --------------- -------------- ------ ------------------- $1,275.00 $133.75 = $1,141.25 Form 4797 --------- ------- ---------
See Page 5 for Applicable Notes. (SRT 2002 TAX) 27 COMPREHENSIVE EXAMPLE 2 (CONTINUED) SABINE ROYALTY TRUST SUPPLEMENT TO TAX COMPUTATION WORKSHEET 2002 FOR UNITS HELD FOR ONLY PART OF THE YEAR This worksheet should be used by Unit holders who became holders of record of Units or ceased to be holders of record of Units during the period from January 15, 2002 through December 16, 2002. This worksheet is designed to assist Unit holders in determining the proper income and expense factors to be used on the Tax Computation Worksheet--Part I, under the heading entitled "Amounts Per Unit from Appropriate Schedule(s)". In order to complete this schedule, Unit holders should insert only the individual income and expense factors from the supplemental schedules (pages 20-21) for the appropriate month during which the Units were owned on a Monthly Record Date. (See page 4 for a list of Monthly Record Dates.)
MONTH(S) DURING WHICH UNITS WERE OWNED ON A MONTHLY RECORD DATE CALCULATED --------------------------------------------------------------------------------------------------- FACTOR JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER PER UNIT* ------- -------- ------- ----- --- ---- ---- ------ --------- ------- -------- -------- ---------- Gross Royalty Income ........ .297075 .138830 .135089 -- -- -- -- -- -- -- -- -- .570994 ------- -------- ------- ----- --- ---- ---- ------ --------- ------- -------- -------- ---------- Severance Tax ........... .016068 .009696 .010768 -- -- -- -- -- -- -- -- -- .036532 ------- -------- ------- ----- --- ---- ---- ------ --------- ------- -------- -------- ---------- Interest Income ........ .000342 .000316 .000174 -- -- -- -- -- -- -- -- -- .000832 ------- -------- ------- ----- --- ---- ---- ------ --------- ------- -------- -------- ---------- Administrative Expense ....... .008720 .009899 .008755 -- -- -- -- -- -- -- -- -- .027374 ------- -------- ------- ----- --- ---- ---- ------ --------- ------- -------- -------- ----------
---------- * This column of calculated factors per Unit should be inserted in column B of the Income and Expense section (Part I) of the Tax Computation Worksheet on page 5. (SRT 2002 TAX) 28 SABINE ROYALTY TRUST HISTORICAL TAX WORKSHEET
WINDFALL NET MISC. NET GROSS PROFIT SEVERANCE ROYALTY INTEREST ADMIN. INCOME/ CASH INCOME TAX TAX PMTS INCOME EXPENSE EXPENSE DISTRIB ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 1983 ..... 2.721361 0.316613 0.155445 2.249303 0.019377 0.086800 0.000000 2.181880 1984 ..... 3.496106 0.323679 0.196022 2.976405 0.031846 0.155652 0.000000 2.852599 1985 ..... 2.853378 0.190767 0.171256 2.491355 0.021277 0.169099 -0.005487 2.338046 1986 ..... 1.807003 0.041149 0.114513 1.651341 0.012242 0.184580 0.005487 1.484490 1987 ..... 1.648950 0.000209 0.095558 1.553183 0.010601 0.127094 0.000000 1.436690 1988 ..... 1.556021 0.000077 0.101561 1.454383 0.010753 0.098526 0.000000 1.366610 1989 ..... 1.594196 0.000028 0.131330 1.462838 0.013627 0.096295 0.000000 1.380170 1990 ..... 1.748059 0.000000 0.155821 1.592238 0.014058 0.075026 0.000000 1.531270 1991 ..... 1.810596 0.000000 0.188955 1.621641 0.010622 0.084643 0.000000 1.547620 1992 ..... 1.556025 0.000000 0.132087 1.423938 0.005520 0.135228 0.000000 1.294230 1993 ..... 1.751674 0.000000 0.126197 1.625477 0.005316 0.169163 0.000000 1.461630 1994 ..... 1.422338 0.000000 0.094300 1.328038 0.005172 0.135390 0.000000 1.197820 1995 ..... 1.257833 0.000000 0.086219 1.171614 0.007424 0.151878 0.000000 1.027160 1996 ..... 1.650891 0.000000 0.102044 1.548847 0.009748 0.187465 0.000000 1.371130 1997 ..... 1.955335 0.000000 0.144324 1.811011 0.010812 0.177263 0.000000 1.644560 1998 ..... 1.937789 0.000000 0.123769 1.814020 0.011159 0.171521 0.000000 1.653658 1999 ..... 1.663391 0.000000 0.115700 1.547691 0.008112 0.148838 0.000000 1.406965 2000 ..... 2.586743 0.000000 0.157354 2.429389 0.016044 0.170794 0.000000 2.274639 2001 ..... 3.240755 0.000000 0.210965 3.029790 0.014627 0.183788 0.000000 2.860629 2002 ..... 2.175093 0.000000 0.125845 1.991937 0.003150 0.173568 0.057311 1.878830
(SRT 2002 TAX) 29 SABINE ROYALTY TRUST DISCUSSION OF TAX CONSIDERATIONS PERTAINING TO THE OWNERSHIP OF UNITS IN SABINE ROYALTY TRUST The tax law requires individuals, estates, trusts, closely held C corporations and personal service corporations to categorize income and expense into one of three classes, "active," "portfolio" or "passive", based upon the nature of the activity and the involvement of the taxpayer in such activity. Since the Trust is a grantor trust, the Unit holders are deemed to hold the investment in the royalty interests directly and the proper classification of the Trust income and expense will be dependent upon the relevant facts and circumstances of each Unit holder. Generally, income or loss resulting from an interest in the Trust is properly classified as portfolio and as such can be reported as directed on the tax computation worksheet (page 5). However, under certain limited circumstances a different classification may be appropriate; accordingly Unit holders should consult their tax advisor concerning this matter. TAX BACKGROUND INFORMATION Sabine received a private letter ruling from the Internal Revenue Service, dated May 2, 1983 (the "Ruling"), concerning certain tax considerations relevant to the creation and continued existence of the Trust. Pursuant to the Ruling, the Trust is classified for Federal income tax purposes as a "grantor trust" and not as an association taxable as a corporation. A grantor trust is not subject to Federal income tax. Instead, its beneficiaries (the Unit holders in the case of the Trust) are generally considered to own the trust's income and principal as though no trust were in existence. A grantor trust simply files an information return reflecting all items of income and/or deductions that will be included in the returns of the beneficiaries. Accordingly, each Unit holder of the Trust is taxable on his pro rata share of the Trust income and/or deductions. The income received or accrued and deductions paid or incurred by the Trust are deemed to be received or accrued and paid or incurred, respectively, by each Unit holder at the same time as the Trust. Thus, the taxable year for reporting a Unit holder's share of the Trust's income and deductions is controlled by the Unit holder's taxable year and method of accounting rather than the taxable year and method of accounting of the Trust. For example, a cash basis Unit holder should recognize income attributable to his Units as such income is received by the Trust; and deductions attributable to his Units should be claimed when such deductions are paid by the Trust. Effect of Escrow Arrangement The assets of the Trust include royalty and mineral interests in certain producing and proved undeveloped oil and gas properties (the "Properties"), which constitute economic interests in gross production of oil, gas and other minerals free of the costs of production. The Properties are located in six states and were not carved out of any of Sabine's working interests in effecting the distribution. In order to facilitate creation of the Trust and avoid the administrative expense and inconvenience of daily reporting to Unit holders, the conveyances by Sabine of the Properties located in five of the six states provided for the execution of an escrow agreement by Sabine, the Trustee and Bank of America, N.A., in its capacity as escrow agent. The conveyances by Sabine of the Properties located in Louisiana provided for the execution of a substantially identical escrow agreement by Sabine and Bank of America, N.A., in the capacities of escrow agent and of trustee under Sabine Louisiana Royalty Trust. Sabine Louisiana Royalty Trust, the sole beneficiary of which is the Trust, was established in order to avoid uncertainty under Louisiana law as to the legality of the Trustee's holding record title to the Properties located in Louisiana. (SRT 2002 TAX) A-1 Pursuant to the terms of the escrow agreement and the conveyances of the Properties by Sabine, the proceeds of production from the Properties for each calendar month, and interest thereon, are collected by the escrow agents and are paid to and received by the Trust only on the next Monthly Record Date. The escrow agents have agreed to endeavor to assure that they incur and pay expenses for each calendar month only on the Monthly Record Date. The Trust Agreement also provides that the Trustee is to endeavor to assure that income of the Trust will be accrued and received and expenses of the Trust will be incurred and paid only on each Monthly Record Date. Assuming the escrow arrangement is recognized for Federal income tax purposes and the Trustee and the escrow agents are able to control the timing of income and expenses, as stated above, both cash and accrual basis Unit holders will be treated as realizing income only on each Monthly Record Date. The Trustee is treating the escrow arrangement as effective for tax purposes and the accompanying tax information has been presented accordingly. If the escrow arrangement is not recognized for Federal income tax purposes, a mismatching of income and deductions could occur between a transferor and a transferee upon the sale or exchange of Units. In addition, the Trustee would be required to report the proceeds from production, interest income thereon and any deductions to the Unit holders on a daily basis, resulting in a substantial increase in the administrative expenses of the Trust. DEPLETION Cost Depletion Pursuant to the previously mentioned Ruling, each Unit holder is entitled to deduct cost depletion with respect to his pro rata interest in the Properties. This cost depletion deduction is computed by reference to the Unit holder's basis in each of his Units. The deduction for cost depletion must be computed by a Unit holder with respect to each separate property in the Trust. A Unit holder's tax basis in each separate property generally must be determined at the time each Unit is acquired by allocating such Unit holder's cost in each Unit among all properties in the Trust based on their relative fair market values. However, a corporate Unit holder that acquired Units in the distribution from Sabine must determine its tax basis in each separate property in the Trust at the time of the distribution by reference to Sabine's tax basis in each separate property included in the distribution. The cost depletion deduction attributable to each separate property is calculated for a taxable year by multiplying the tax basis of the property times the decimal derived when estimated total equivalent units of production (barrels of oil and MCF's of gas) expected to be recovered from the property as of the beginning of the taxable year is divided into the number of equivalent units produced and sold from such property during the taxable year. The resulting deduction for cost depletion cannot exceed the adjusted tax basis in the property. The composite depletion factors presented herein were derived in a manner that encompasses this separate property concept. Percentage Depletion Prior to the Revenue Reconciliation Act of 1990, Unit holders were prohibited from claiming percentage depletion on transferred proven oil and gas properties. Since substantially all of the properties were "proven properties" on the date of the original distribution, the percentage depletion deduction has limited applicability to Unit holders which became Unit holders prior to October 12, 1990. (SRT 2002 TAX) A-2 For Unit holders which become Unit owners from transfers of Units occurring after October 11, 1990, the Revenue Reconciliation Act of 1990 repeals the prohibition on claiming percentage depletion. A computation of percentage depletion has been made with respect to the post October 11, 1990 transfers. However, since cost depletion exceeds any otherwise allocable percentage depletion, percentage depletion factors have not been presented by reference to the number of units a Unit holder owns. Percentage depletion will continue to be computed and compared to cost depletion on an annual basis for applicable transfers occurring after October 11, 1990. NONRESIDENT FOREIGN UNIT HOLDERS Nonresident alien individual and foreign corporation Unit holders ("Foreign Taxpayer(s)"), in general, are subject to tax on the gross income attributable to the Trust at a rate equal to 30 percent (or the lower rate under any applicable treaty) without any deductions. This tax is withheld by the Trust and remitted directly to the United States Treasury. Foreign Taxpayers who have had tax withheld in 2002 should have received a Form 1042S from the Trust. The Form 1042S will reflect the total Federal income tax withheld from distributions. The amount reported on the Form 1042S should not be included as additional income in computing taxable income, as such amount is already included in the per Unit income items on the income and expense schedules. The Federal income tax withheld, as reported on the Form 1042S, should be considered as a credit by the Unit holder in computing any Federal income tax liability. A Foreign Taxpayer holding income producing real property may elect to treat the income from such real property as effectively connected with the conduct of a United States trade or business. The income attributable to the Properties is considered as income produced from real property. Therefore, this election should be available to Foreign Taxpayers with respect to the taxable income resulting from the ownership of Units. A Unit holder so electing is entitled to claim all deductions with respect to such income, but must file a United States income tax return to claim such deductions. This election once made is generally irrevocable unless an applicable treaty allows the election to be made periodically. The Foreign Investment in Real Property Tax Act of 1980, as amended ("FIRPTA"), generally treats interests in trusts owning United States real property as United States real property interests. However, pursuant to applicable Treasury regulations, Units in Trust, for purposes of FIRPTA only, are not considered United States real property interests unless they are owned by a Unit holder having greater than a 5% interest in the Trust. Additionally, certain reporting provisions are applicable with respect to Foreign Taxpayers owning a greater than 5% interest in the Trust. Generally, income tax is required to be withheld from any proceeds distributed to Foreign Taxpayers at the rate of 10% of the amount realized by Foreign Taxpayers upon the sale, exchange or other disposition of a Unit. This withholding is required only when the FIRPTA provisions apply, as described in the preceding paragraph. In addition, distributions, if any, that represent the Foreign Taxpayer's allocable share of gain realized upon the sale, exchange or other disposition of a United States real property interest by the Trust, will generally be subject to withholding tax at a 34% rate. In order to avoid such withholding when the FIRPTA provisions apply, Foreign Taxpayers will be required to furnish the applicable withholding agent with an exemption statement certifying why such withholding is not required. Foreign Taxpayers are encouraged to consult their own tax advisors concerning the tax consequences of their investment in the Trust. (SRT 2002 TAX) A-3 SALE OR EXCHANGE OF UNITS Generally, a Unit Holder realizes gain or loss upon the sale or exchange of any Unit measured by the difference between the amount realized from the sale or exchange and the adjusted tax basis of such Unit. The adjusted tax basis of a Unit is the original basis of such Unit reduced by depletion deductions allowable (whether deducted or not) with respect to such Unit. Trust income allocable to such Unit to the date of sale is taxable to the selling Unit holder. The purchaser of a Unit is taxable on Trust income allocable to such Unit from the date of purchase forward. For Federal income tax purposes, Trust income should generally be allocable only to the holder of record of a Unit on each Monthly Record Date. Gain or loss on the sale of a Unit by a Unit holder who acquired the Unit(s) prior to January 1, 1987 who is not a "dealer" with respect to such Unit, who holds it as a capital asset and who has held it for the required amount of time will, in general, be treated as a long-term capital gain or loss. A Unit holder who is not a dealer who sells a Unit acquired on or after January 1, 1987 must recapture the depletion deductions taken with respect to such Unit by recognizing as ordinary income the lesser of (1) the depletion deductions taken or (2) the amount realized upon the sale less the adjusted basis of the Unit. Gain in excess of the recaptured depletion deduction will, in general, be treated as a capital gain. Units acquired after 1987 qualifying as capital assets must be owned more than 1 year to qualify for long-term capital gain or loss treatment. BACKUP WITHHOLDING A payer is required under specified circumstances to withhold tax at the rate of 31% on "reportable interest or dividend payments" and "other reportable payments" (including certain oil and gas royalty payments). Generally, this "backup withholding" is required on payments if the payee has failed to furnish the payer a taxpayer identification number or if the payer is notified by the Secretary of the Treasury to withhold taxes on such payments with respect to the payee. Amounts withheld by payers pursuant to the backup withholding provisions are remitted to the Internal Revenue Service and are considered a credit against the payee's Federal income tax liability. If the payee does not incur a Federal income tax liability for the year in which the taxes are withheld, the payee will be required to file the appropriate income tax return to claim a refund of the taxes withheld. STATE INCOME TAX Unit holders may be required to file state income tax returns and may be liable for state income tax as a result of their ownership of Units. The Properties are located in Florida, Louisiana, Mississippi, New Mexico, Oklahoma and Texas. The tax information included in this booklet is being presented in a manner to enable Unit holders to compute the income and deductions of the Trust attributable to each of these states. Unit holders will need this information to comply with the state income tax filing requirements in those states imposing a state income tax. The laws pertaining to income tax in any given state may vary from those of another state and from those applicable to Federal income tax. Accordingly, Unit holders are urged to consult their own tax advisors concerning this matter. (SRT 2002 TAX) A-4 The Trustee has been informed that certain states have contacted Unit holders regarding underpayments of the state income tax imposed on the Unit holders' income from the Trust. Failure by Unit holders to properly report their state tax liability could result in the direct withholding of state taxes from Trust distributions. Accordingly, Unit holders are urged to carefully review the various filing requirements of the states listed below in order to determine if a current or prior year state income tax liability exists as a result of the ownership of Units in the Trust. The state of Texas does not impose an individual income tax; therefore, no part of the income attributable to the Trust will be subject to state income tax in Texas for individuals. However, corporations (and Limited Liability Companies) doing business in Texas are subject to the Texas Franchise Tax which now includes a calculation based on the corporation's taxable income for Federal income tax purposes. The state of Florida imposes an income tax on resident and nonresident corporations but not individuals. Each of the other states in which the Properties are located imposes an income tax applicable to both resident and nonresident individuals and corporations. Generally, the state income tax in these states is computed as a percentage of taxable income attributable to the particular state. Furthermore, even though there are variances from state to state, taxable income for state purposes is often computed in a manner similar to the computation of taxable income for Federal income tax purposes. All states have not adopted Federal law with respect to the percentage method of computing depletion nor are such methods consistent among the various states. It should be noted, however, that cost depletion is allowed by those states indicated above which impose a state income tax. Included herein is information to assist you in determining the respective allowable cost depletion deductions by state. The following table reflects calendar year corporate and individual income tax return due dates for the states in which the Properties are located. The state income tax return due dates for fiscal year taxpayers will generally allow the same period of time following the end of their respective fiscal years as is allowed for calendar year taxpayers. However, the Texas franchise tax return is generally due for all corporations on May 15.
STATE CORPORATE TAXPAYER INDIVIDUAL TAXPAYER ----- ------------------ ------------------- Texas May 15 Not Applicable Florida April 1 Not Applicable Louisiana April 15 May 15 Mississippi March 15 April 15 Oklahoma March 15 April 15 New Mexico March 15 April 15
Unit holders should consult their own tax advisors concerning the type of state income tax returns that may be required and their applicable due dates. (SRT 2002 TAX) A-5 Following is a list of names and addresses of the various state taxing authorities from which you may obtain additional information: Florida Florida Department of Revenue 5050 W. Tennessee Street Tallahassee, Florida 32399-0100 (850) 488-6800 www.state.fl.us New Mexico Individuals: State of New Mexico Taxation and Revenue Department 1100 Saint Francis Drive P.O. Box 25122 Santa Fe, New Mexico 87504-5122 (505) 827-0700, (505) 827-0822 www.state.nm.us Corporations: New Mexico Taxation and Revenue Department Attention: Corporate Income and Franchise Tax P.O Box 25127 Santa Fe, New Mexico 87504-5127 (505) 827-0825 www.state.nm.us Mississippi Mississippi State Tax Commission Bureau of Revenue P.O. Box 1033 Jackson, Mississippi 39215-1033 (601) 923-7000 www.state.ms.us Louisiana Individuals: Department of Revenue and Taxation State of Louisiana P.O Box 3440 Baton Rouge, Louisiana 70821-3440 (225) 219-0102 www.state.la.us Corporations: Secretary of Revenue and Taxation State of Louisiana P.O. Box 3863 Baton Rouge, Louisiana 70821 (225) 219-0067 www.state.la.us Oklahoma Individuals: Oklahoma Tax Commission P.O. Box 26800 Oklahoma City, OK 73126-0800 (405) 521-3160 www.state.ok.us Corporations: Oklahoma Tax Commission P.O. Box 26800 Oklahoma City, Oklahoma 73126-0800 (405) 521-3126 www.state.ok.us Texas Texas Comptroller of Public Accounts P.O. Box 13528, Capitol Station Austin, Texas 78711-3528 (800) 252-5555 www.state.tx.us
(SRT 2002 TAX) A-6