How do I calculate the depletion allowance on Oil royalties earned in 2018 as a result of mineral rights that I own?

[DaveF1006]

It depends. I worked through the section and it only asks for the Royalty income. Here is the reason why.

1.  Partnerships are not taxed at the entity level. The profits get passed on to the members on their K-1's and they report the K1 activity on their own personal tax returns on their share of the profits. It is here that each partner can enter expenses on their share of Royalty income, including depletion.
2. Now you will go to federal>income and expenses>

3. S-corps, Partnerships, and Trusts>Schedule K-1

4. Here you will see a schedule of your K1's. Here is where you will enter information that it is a royalty, and name and address for the royalty and other pertinent information. 

5. Since it is a royalty you can add income or expenses and you will see a section to add the expenses.

6. Also Turbo tax will automatically determine a depletion percentage that is based on your net income after you enter income and expenses for the royalty.

@MHhri 

[MHhri]

Here's what I am grappling with for the last 2 days. I have calculated the Depletion amount. I have alread added the Depletion as expenses in quickbooks which got imported into Turbo Tax Business (version) which is what I am using. Now how do I enter numbers in Schedule M-1, Schedule K-1 so that my 1120-S shows a higher Net Tax Return Income than the Book Net Income by the amount of the Depletion. I am not able to Balance it. I don't get to see Schedule K line 18 which is where they are asking me to work from. How do I see that? Basically, I want the Book Income and Balance Sheet to be off from Tax Return Net Income and Balance Sheet by the Depletion amount. Would you PLEASE show me step-by-step on how to connect the two through M-1 and K-1 Forms or some other way. 

I thank you for telling me what I expect when I do my Personal Taxes as I have to enter the Info there from K-1. I will deal with that later. I just want my Turbo Tax Business 1120-S filed correctly.

Are there experts on Turbo Tax Business version who are well versed with that Program? I have a feeling that Turbo Tax Business Developers are not paying much attention to  Oil& Gas Income businesses. 

Please respond as soon as you can as I am stuck.

Thanks in advance!

[DaveF1006]

Since Turbo Tax Business does not specifically address depletion for oil/gas royalties, you can list this this depletion expense as all other expenses in he Turbo tax Business program as PaulaM suggests in her Turbo Tax post. 

@MHhri