Investors & landlords

@MHhri

You are correct that depletion is deducted by the Shareholders and not the S-Corp.

Each shareholder must determine the allowable amount to report on his or her return. See the IRS Instructions for Form 1120S Schedule K-1, box 17, code R for the information on oil and gas depletion that must be supplied to the shareholders by the corporation.

In TurboTax Business, you can generate the Supplemental Information attachment for Schedule K-1 using Forms Mode.

Note: you will be making entries to more than one worksheet. Be sure you're in the correct worksheet for each step.

1. Click the Forms icon in the TurboTax header.
2. Look for "K-1 Partner" in the left column. Click the form name to open it in the large window. 
   If you don't see this form in the list, you may need to open a new copy by clicking on Open Form and typing in "k-1". Name the worksheet the same as your partnership name. Then fill in the partnership info at the top of the worksheet before you continue.
3. Scroll down to Line 20.
4. Click the drop-down under Code and select "T". TurboTax automatically enters the description for depletion with an asterisk. Enter the total amount to be allocated to the partners.
5. Now open Schedule K-1 for the first partner. Scroll down to Line 17. Enter "R" in the first code box. TurboTax automatically enters "STMT" to indicate additional information to follow.
6. Scroll down below Line 19 to the Supplemental Information Smart Worksheet. Enter "Line 17-R" and a description. Then enter the amount allocated to this partner. (TurboTax does not calculate this for you.)
7. Repeat Step 5 & 6 for each partner. Leave all forms open until you review the results.
8. To see Schedule K-1 and the attachment, print preview the form (in the menu bar, click File >> Print (Schedule K-1 will appear) >> Print Preview). Additional information will appear on a separate sheet after Schedule K-1, with the information you entered.
9. When you're finished, click "Step-by-Step" in the header to return to the interview.