NMSA 1978, § 7-36-23 — 7-36-23

Special method of valuation; mineral property and property
used in connection with mineral property; exception for potash and
uranium mineral property and property used in connection with
potash and uranium mineral property.

# A.

The provisions of this section apply to the valuation of all mineral property and
property used in connection with mineral property except potash and uranium mineral
property and property used in connection with potash and uranium mineral property, the
methods of valuation for which are provided in Sections 7-36-24 and 7-36-25 NMSA
1978.

# B.

The following kinds of property held or used in connection with mineral property
shall be valued under the methods of valuation required by the Property Tax Code:
(1) improvements, equipment, materials, supplies and other personal property
held or used in connection with all classes of mineral property; "improvements" as used
in this section includes surface and subsurface structures, but does not include pits,
shafts, drifts and other similar artificial changes in the physical condition of the surface
or subsurface of the earth produced solely by the removal or rearrangement of earth or
minerals for the purpose of exposing or removing ore from a mine; and
(2) the surface value for agricultural or other purposes of class one productive
or nonproductive mineral property when the surface interest is held in the same
ownership as the mineral interests.

# C.

The value for property taxation purposes of class one productive mineral property
is an amount equal to three hundred percent of the annual net production value of the
mineral property.

# D.

The value for property taxation purposes of class two and class three mineral
property is an amount equal to three hundred percent of the annual net production
value.

# E.

The value for property taxation purposes of class one nonproductive mineral
property shall be determined by applying a per acre value to the surface acres of the
property being valued. The per acre value of class one nonproductive mineral property
shall be determined under regulations adopted by the department, which regulations
shall establish a per acre value based upon bonus bids accepted by the commissioner
of public lands for the latest one year period in which bonus bids were accepted for the
sale of mineral leases, which per acre value may be determined by geographical areas.

# F.

For purposes of this section, "annual net production value" means either:
(1) the average of five years' net production value from the mineral property
for the five years immediately preceding the tax year in which value is being
determined, or so much of the period during which the property has been in operation,
with each year's net production value being determined by taking the year's market
value of production of all minerals, including any bonus or subsidy payments, and
deducting from that value:
(a) any royalties paid or due the United States, the state or any Indian tribe,
Indian pueblo or Indian who is a ward of the United States;
(b) the direct costs, exclusive of depreciation, determined under generally
accepted accounting principles consistently applied by the taxpayer, of extracting,
milling, treating, reducing, transporting and selling the minerals; and
(c) the costs of depreciation, determined under generally accepted
accounting principles consistently applied by the taxpayer, of property actually used in
the extracting, milling, treating, reducing and transporting of the minerals; or
(2) the net production value from the mineral property for the year
immediately preceding the tax year in which value is being determined, with that year's
net production value being determined by taking the year's market value of production
of all minerals, including any bonus or subsidy payments, and deducting from that
value:
(a) any royalties paid or due the United States, the state or any Indian tribe,
Indian pueblo or Indian who is a ward of the United States;
(b) the direct costs, exclusive of depreciation, determined under generally
accepted accounting principles consistently applied by the taxpayer, of extracting,
milling, treating, reducing, transporting and selling the minerals; and
(c) the cost of depreciation, determined under generally accepted accounting
principles consistently applied by the taxpayer, of property actually used in the
extracting, milling, treating, reducing and transporting of the minerals.

# G.

Annual net production value shall be determined under Paragraph (1) of
Subsection F of this section unless the taxpayer elects to have it determined under
Paragraph (2) of that subsection. To be effective, an election must be exercised by
written notification to the department at the time the mineral property is reported to the
department for valuation in a tax year. Once an election is exercised, a taxpayer may
not change from the elected method without the prior approval of the department.

# H.

The department shall adopt regulations specifying procedures to be followed
under, and the details of, the method for valuation of mineral property specified in this
section.