Expenses of oil & gas royalty

Forum|Forum|6 years ago
February 4, 2020
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I entered royalty income from 1099-MISC, but I don't see where it is showing up, and I haven't found a way to enter the production taxes and other deductions.

TurboTax Home & Biz Windows

Best answer by klehnhardt

The Royalty Income on Form 1099-Misc should be reported on SCHEDULE E - Supplemental Income and Loss .

To enter the royalties, you should:

Go to Income & Expenses at the top of the screen
Find Rental Properties and Royalties (Sch E) Schedule E, Copy 1
Select Start to the right of the line and answer the questions asked.

You will be able to enter the production taxes and other deductions on the Schedule E,

klehnhardtAnswer

Level 10

The Royalty Income on Form 1099-Misc should be reported on SCHEDULE E - Supplemental Income and Loss .

To enter the royalties, you should:

Go to Income & Expenses at the top of the screen
Find Rental Properties and Royalties (Sch E) Schedule E, Copy 1
Select Start to the right of the line and answer the questions asked.

You will be able to enter the production taxes and other deductions on the Schedule E,

jmarka

Level 2

I don't find this option on my software. I have Premier. I have a 1099-MISC for oil and gas royalties and on the back the company has a heading and amount for "Deductions" and "Production Tax." My TurboTax program does not provide a place for me to enter them. Can I go to Forms and enter them there on Schedule E, and if so where? Thanks for any help.

mesquitebean

Level 15

@ jmarka wrote:
I don't find this option on my software. I have Premier. I have a 1099-MISC for oil and gas royalties and on the back the company has a heading and amount for "Deductions" and "Production Tax." My TurboTax program does not provide a place for me to enter them. Can I go to Forms and enter them there on Schedule E, and if so where? Thanks for any help.

Have you formally gone through the Rental/Royalty interview (which prepares Schedule E?) If you go through it step by step, you'll encounter the Royalty Expense section.

When you start that interview , after some preliminary information it asks for, it will allow you to select "royalty property" and then it asks what type--"oil and gas" (if applicable). Then it will ask for your royalty income. Then it will likely show you your depletion allowance that it automatically calculates.

After some more screens, you will arrive at a summary screen called "Your (property) Royalty Summary."

On that screen scroll down to topic EXPENSES and choose Start or Revisit (or similar).

It will show you some common expenses. Enter any, if applicable.

One of the expenses in the list as you continue on will be boxes for Real Estate Taxes and Other Taxes.

You could put production taxes under "other taxes."

NOTE: Also, did you pay any county mineral tax to the county tax office; i.e., a mineral property tax? If so, don't forget to deduct it, too.

If you see a box for depletion there, it will likely be prepopulated.

As you continue on through several more screens, you'll finally arrive at one called "Any Miscellaneous Expenses?" There you can enter and label any other expenses. Your statement may call them "deductions", or marketing/transportation/pipeline/compression charges or whatever. I usually just label a box "Production costs" and provide the amount.