Royalties from oil and gas trust

[lindarose]

Where do I report the royalties received from investments in oil and gas trusts?

[DoninGA]

What IRS Form was used to report the royalty income to you?

[Anonymous]

schedule E rent and royalties 

[Carl]

All royalty income is normally reported to you on a 1099-MISC in box 2. That income gets reported on SCH E. With TurboTax self-employed select the Business tab and elect to start/update Rental & Royalty Income (SCH E).

With all other versions of TurboTax, select the Personal Income tab, scroll down to Business Items and under that elect to start/update Rental & Royalty Income (SCH E).

One thing of importance is that you *READ* *THE* *SMALL* *PRINT* on each and every screen. Failure to do that will result in you incorrectly reporting the income and could potentially result in an audit 24-36 months after you file an incorrect tax return.

[jfey]

I am an agent for an estate land trust, that owns mineral rights in WV, and receives rental income from 2 gas storage wells on the property, and gas & oil royalties from part of our net mineral acreage being included in a larger pooled unit, containing 4 producing O&G wells. The net income from these items are then redistributed to the heirs of the estate. The rental income and O&G royalty income are both documented on 1099-MISC forms. Are either or both of these income items considered qualified business income?

[KrisD15]

It would seem so. When the tax documents are entered into TurboTax, the program will alert you of the qualifying business income. 

According to the IRS:

"This component of the deduction equals 20 percent of QBI from a domestic business operated as a sole proprietorship or through a partnership, S corporation, trust or estate."

QBI

[BSJ1030]

I have 1 error when I run the review which I have worked two hours now to try to clear.  It high lights the Royalty income line on the Schedule E Worksheet.  I have checked and rechecked the entry of the royalty and cant find an answer.  I cannot override this number or it will not let me send in the return.  I have deleted and re entered the 1099 Misc multiple times.  Any ideas? 

[DaveF1006]

If the problem persists, you may need to print and mail the return if you are certain the right information is recorded from the 1099 MISC. You might also reach out to phone support so they can look at a diagnostic copy from your return to see why this particular issue is happening. 

[BSJ1030]

I had no problem with this last year but they have changed the way it is entered.  I could send in a paper return but I have heard that it increases the risk of an audit.  Since we are only talking about $100 of income I was wondering if I should just leave it off and let them do the correction for me.

[DianeC958]

It is best if you include the information in your return. 

If you wait for the IRS to send you a letter about it then you will have an under reporting penalty,  failure to pay penalty and interest on the tax due.

The IRS has 3 years from the time you file you return to assess additional tax. 

@BSJ1030 

[BSJ1030]

I was able to delete the worksheet and enter the information directly to the tax form.  The error disappeared and I can now file my taxes.  I assuming there is some kind of glitch in the program.  Thanks for your advice. 

[AFT3RJBN7XG5HW]

I need to get to page 2 of schedule E to enter my info under "Income from Estates and Trusts"

[DoninGA]

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@AFT3RJBN7XG5HW wrote:

I need to get to page 2 of schedule E to enter my info under "Income from Estates and Trusts"

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Do you have a Form 1041 Schedule K-1?

[ThomasM125]

The entries on page 2 of schedule E come from the form K-1 entries that you make. 

[GREATCORP]

HOW DO I IDENTIFY OIL & GAS ROYALTIES FROM A SCHEDULE K-1 SO THAT I GET THE DEPLETION ALLOWANCE?