Form 4797 Sale of Business Property. I disposed of Working Interest in Oil & Gas Wells. Is the 15% Depletion taken treated as the "Depreciation Allowed"?

[dyeliad]

I purchased Oil & Gas Working Interests in 2009.

In 2017, I signed over a Release of Working Interest Ownership & Joint Operating Agreement Obligations for the Oil & Gas Leases.

This “Sale” was for $0.00.

I filed a Schedule C and paid Self-Employment taxes each year including Production Revenue and Expenses for State Severance Tax, Lease Operating Expenses, and 15% Depletion. 

On Form 4787, Is the "Depreciation Allowed or Allowable since Acquisition" equal to only the total of 15% Depletion taken?

[PatriciaV · Accepted solution]

Yes, when entering the sale of an oil & gas working interest, enter the 15% Percentage Depletion taken as "Depreciation Allowed." This amount would normally appear on Form 4797 Part III Line 28, but as long as you report the depletion, you should be fine.