oreodog
New Member

15% Percentage depletion impact on basis for gain or loss calculation

Does the 15% depletion deduction available to oil and gas royalty owners impact your basis?  I have used this deduction for three years and now can sell my rights but I want to know how to calculate the gain on sale.  It is not clear if I need to reduce my basis to below 0 (I had no basis) to recapture the deletion as ordinary income.