Oil Royalties

Forum|Forum|6 years ago
March 30, 2020
2 replies
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Every time I want to include Oil Royalty income it assumes that we own the property. We only own the Mineral Rights but it keeps coming back and makes the assumption we own the land.

TurboTax Deluxe Online

Best answer by DaveF1006

Regardless, it will ask you the property information where these mineral rights are located. You would need to fill out this section even though you do not own the land. What is important in this is;

As you go through the rental and royalty property information and put an address where the rights are located. Doesn't really need to be too detailed.
make sure on that screen where you report the location, select this is Royalty income
Then as you progress through the screens, there will be a question that asks What type of Royalty income is this you will indicate that this is mineral property
Then the next screen will ask you what the income is. This may be already populated if you have already entered a 1099 MISC.
Then it will ask you for a depletion amount if you have that information.
You're finished at this point.

DaveF1006Answer

Level 15

Regardless, it will ask you the property information where these mineral rights are located. You would need to fill out this section even though you do not own the land. What is important in this is;

As you go through the rental and royalty property information and put an address where the rights are located. Doesn't really need to be too detailed.
make sure on that screen where you report the location, select this is Royalty income
Then as you progress through the screens, there will be a question that asks What type of Royalty income is this you will indicate that this is mineral property
Then the next screen will ask you what the income is. This may be already populated if you have already entered a 1099 MISC.
Then it will ask you for a depletion amount if you have that information.
You're finished at this point.

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Bakerman

Level 2

I have the same issue. It thinks I have my own business. Usually have a bunch of corrections at the end for the schedule c. I looks like the royalty goes in twice. Once as a business and again as a royalty.

GeorgeM777

Level 11

If you have just a royalty, and the royalty is not connected to a business, then your return should reflect that your income includes whatever royalty payment you have received. You should not have a Schedule C. Here are the steps to delete your Schedule C if you do not need this form.

Open or continue your return in TurboTax.
In the left menu, select Tax Tools and then Tools.
In the pop-up window Tool Center, choose Delete a form.
Select Delete next to the form/schedule/worksheet in the list and follow the instructions.

Regarding your royalty payment, when entering this information you should have seen a screen such as the one pictured here (which is from our test return), or a similar screen. From this page you would enter your information and respond to the questions when prompted until the end of the section.

@Bakerman

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rowball

Level 2

I have a small business and royalty income from mineral rights that we own. So I need a schedule c but, not for royalty income. The program insists on schedule c for royalty income. That is not correct for our situation. Is there a fix I am not seeing?

DoninGA

Level 15

@rowball wrote:

I have a small business and royalty income from mineral rights that we own. So I need a schedule c but, not for royalty income. The program insists on schedule c for royalty income. That is not correct for our situation. Is there a fix I am not seeing?

Investment income from property you own – This includes natural resources extracted from your property by a third party who leases your property, as well as royalties from intellectual property that you didn't create yourself. This gets reported on Schedule E
Royalty income from your business, including artist royalties or operating a natural resources business (Schedule C) – This includes income from natural resources that you extract from your property as well as royalty payments from intellectual property you created as an inventor, writer, artist, and so forth. This gets reported on Schedule C