on what lines of the k-1 does the royalty income and depletion appear.
from IRS PUB 925 Passive Activities
2. A working interest in an oil or gas well which you hold directly or through an entity that doesn’t limit your liability (such as a general partner interest in a partnership). It doesn’t matter whether you materially participated in the activity for the tax year. However, if your liability was limited for part of the year (for example, you converted your general partner interest to a limited partner interest during the year) and
you had a net loss from the well for the year, some of your income and deductions from the working interest may be treated as passive activity gross income and passive activity deductions. See Temporary
Regulations section 1.469-1T(e)(4)(ii)
An LLC would limit your liability.
Working interest is a term for a type of investment in oil and gas drilling operations in which the investor is directly liable for a portion of the ongoing costs associated with exploration, drilling, and production. As part of the investment, working interest owners also fully participate in the profits of any successful wells. This stands in contrast to royalty interests, in which an investor's cost is usually limited to the initial investment, also resulting in a lower potential for large profits.
there is another type of oil royalties where the investment is an overriding royalty interest. this is portfolio income not subject to PAL rules.
the other possibility is that you have entered something incorrectly in TT for the LLC k-1's. we can not see the k-1's or your tax return.
for further support, you would probably would need to upgrade to live so a pro could review the return.
