Mineral Deposit Donations: Turning Natural Resources Into Tax Savings

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Mike Malachowski

Mike loves helping business owners make and save money. In the past ten years, he’s been able to help new and established business owners understand and navigate taxes. Mike enjoys learning about innovative businesses and helping them save more money throughout the year— not just at tax time.
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Mineral Deposit Donations: Turning Natural Resources Into Tax Savings

Contributor, Mike Malachowski on October 7, 2025
1 min read

When most people think about charitable giving, they imagine donating cash, stock, or maybe real estate. But for high-income earners, there’s a lesser-known strategy that can provide massive tax deductions: donating mineral deposit rights.

This approach—popular among investors and business owners—can yield charitable deductions up to four times the initial investment, while also supporting nonprofit organizations.

What Are Mineral Deposit Donations?

A mineral deposit donation involves acquiring ownership interests in natural resources such as volcanic ash, stone, or sand, and then donating those rights to a qualified nonprofit.

Because these resources have an independently appraised fair market value, the deduction you receive is typically much higher than the cost you paid.

For example:

  • You acquire $25,000 worth of mineral rights.
  • An independent appraisal values them at $100,000.
  • You donate the rights to a qualified charity.
  • You can claim a charitable deduction of $100,000, subject to IRS rules.

Why This Strategy Matters Now

With tax rates high and charitable planning under the spotlight, mineral deposit donations give wealthy taxpayers a way to:

  • Reduce current taxable income.
  • Support charitable causes.
  • Leverage resources that may otherwise remain unused.

In a time when the IRS is scrutinizing deductions closely, it’s important that this strategy be executed with proper documentation and compliance.

How It Works in Practice

  1. Acquire mineral rights through a qualified provider.
  2. Get an independent appraisal to establish fair market value.
  3. Donate the rights to a qualified nonprofit organization.
  4. File IRS Form 8283 with your tax return, along with the appraisal.

When structured correctly, this allows you to claim a deduction worth several times your initial outlay.

Pros and Cons of Mineral Deposit Donations

Pros

  • Potential for 4x deduction relative to investment.
  • Supports nonprofit causes.
  • Unique diversification of charitable planning.

Cons

  • Requires strict IRS documentation.
  • Deductions are limited to 30% of adjusted gross income for non-cash assets.
  • Highly scrutinized—must be done properly to avoid audit risk.

Deadlines to Keep in Mind

  • Donations must be completed by December 31 of the tax year to count.
  • Appraisals and IRS forms must accompany your return—missing paperwork can invalidate the deduction.

Final Thoughts

Mineral deposit donations may not be as mainstream as donating stock or real estate, but for high-income earners, they represent a powerful and legal way to transform natural resources into substantial tax savings.

With proper structuring, independent appraisals, and professional guidance, this strategy can help you maximize deductions while supporting meaningful causes.

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