So, I was able to fix the depletion allowance and royalty income issue related to improperly showing on Form 8582. First I had to report royalties on a different line of the K-1 despite the way it was reported to me (there is a specific line for royalties) and I had to correct the K-1 supporting page which is appears to auto-populate when it sees Code T in box 20. Simply remove the depletion allowance information on the supporting schedule. Then it is only reported on Schedule E as required.
