How do I Recapture Depletion after sale of a Royalty Trust?

[SoggyFeet]

Say I bought a Royalty Trust at $6500 Cost Basis.  Sold at a loss for $5000.   Over the years, I claimed depletion expense of $750.  I assume I will adjust my basis before claiming a loss.  Where/How do i do that?  Which form?
Thank you!

Mike

[ToddL]

If you sold it at a loss, there isn't any depletion recapture. In calculating the loss, however, you would adjust the basis by the amount of depletion claimed.

If the royalty trust is sold at a gain, past depletion deductions which reduced adjusted cost basis must be recaptured as ordinary income.  The remaining gain is eligible for capital gains treatment. 

From the IRS Part 4. Examining Process, Chapter 41. Oil and Gas Industry, Section 1. Oil and Gas Handbook (Cont. 2): For oil and gas property placed in service after 1986, the amount required to be recaptured is the smaller of the aggregate amount deducted as IDC on the property plus the depletion deductions that reduced the basis of the property or the gain realized on the disposition.

Since there wasn't a gain (i.e. gain = 0), there isn't any recapture.

https://www.irs.gov/irm/part4/irm_04-041-001-cont02.html

[SoggyFeet]

"In calculating the loss, however, you would adjust the basis by the amount of depletion claimed."  

How do I input the adjustment to basis?  Seems like all the fields on Form 8949 are locked.  Schedule D Part II (Long Term Gains with the field for "Adjustments to gain or loss" directs me to Form 8949.   Thanks.

[ToddL]

You sold it, correct? Did you get a 1099-B? If so, you can adjust (if necessary) the cost basis to account for depletion. What TurboTax product are you using?

[ToddL]

The 1099-Bs are the "entry points" for the 8949 and Schedule D

[SoggyFeet]

I am using Turbo Tax Premier.

1099-B does not indicate any basis adjustment.   On the tax forms, I'm looking for a line where i can add, "basis adjustment for depletion claimed" or something to that effect.

Thank you for your help.

[SoggyFeet]

Poking around, I found this answer for a slightly different situation, but still attempting to report an adjusted basis.  

<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/2794056-adjustment-code-error-for-1099-b-turbotax-only-recognizes-...>

[ToddL]

This is where you make the adjustment. Select  "Add More Details" and on the next page select the first option which is to "I need to add or fix info about this sale that's on my Form 1099-B." Tell TurboTax that the 1099-B is reporting the wrong basis and then enter the "accumulated depletion" (negative number?) get to the correct basis.

[ToddL]

You can adjust the basis in that screen for any appropriate reason.

[muddobber]

I inherited royalty rights in 1960. I got married in 1968. I died in 2016. I  sold them In 2019. The value $64682 in 1960. The value was 104365 in 2016. I sold them in 2019 for $127300. I was reducing my royalties by %15 each year in depletion. What is the depletion amount I need to recapture?