I received a 1099-MISC for executing a mineral rights lease agreement (oil & gas). Should I report this as a "rent from a rental property" or as a "royalty" payment?

[ghaakenson]

The state withholdihng tax was in ND, where the oin & gas production is taking place.

[KathrynG3]

Typically, investment activity for oil and gas would be captured on Schedule E, entered under Rental Properties and Royalties (Sch E) in the Wages & Income section.

If this activity does not already include Form 1099-MISC, to report it separately, you would need to go to the Other Common Income section of Wages & Income.

When entering Form 1099-MISC, check the box for My form has other info in boxes 1-18 to capture the ND taxes withheld in Box 16.

[ghaakenson]

The production tax paid soesn't have a box #.  And the boxes 15-19 only show state W/H box and state paid.  So, even though small amount, I want to be correct.  I want back to the questionaire and there is a box under "other expenses" labelled "taxes", so I put the $41 in there (I said it wasn't much).

[ghaakenson]

So when in the Turbo Tax questioning process is this Schedule E generated?

[DaveF1006]

Yes, this type of income will be reported on a Schedule E. Even though it is not rental estate, it has to be reported like it is because this sounds like you are receiving lease payments or a lease bonus for your mineral rights. Please read this Turbo Tax link for additional information how to properly report this.

Once this information is recorded, this will automatically generate Schedule E. 

[ghaakenson]

Thanks, again.  I figured out the Sched. E.  Now I have a question about the necessity to buy and file another state return for this "small" income in ND (My home state is NC, and I'm filing that return).  The Total Gross O&G royalty $416; ND W/H $8.84; Prod. Tax $41.; Net $366.40.  Do I need to file a ND state return, for this (And, therefor buy another state return from TT)?

[RobertG]

Unfortunately, you do have a North Dakota filing requirement.  This is a FAQ from the North Dakota tax authority ND Tax.  See this website: ND Tax

When is a nonresident of North Dakota required to file a North Dakota individual income tax return?

A nonresident of North Dakota is required to file a North Dakota individual income tax return if the individual (1) is required to file a federal individual income tax for the tax year and (2) has any gross income from North Dakota sources.

"Gross income from North Dakota sources" includes compensation for services performed in North Dakota, such as wages, salaries, tips, commissions, and fees; income from tangible property in North Dakota, such as rents, oil and gas royalties, and gain from the sale or exchange of the property; income from a trade or business carried on in North Dakota, whether as a sole proprietorship, partnership, or S corporation; income from an estate or trust, but only to the extent the income is derived from tangible property or a trade or business in North Dakota; income from gambling activity carried on in North Dakota; and unemployment compensation attributable to previous employment in North Dakota.

@ghaakenson

[ghaakenson]

Now, I made the grievous error (sarcasm, sorry) of putting a period after my middle initial on the ND return form, hence "too many characters" in middle initial box.  TT keeps telling me that, highlighting the box with an "A." , but will not allow me to correct it!  So I cannot e-file the stupid return.  What to do?  I'm frustrated.  Yes, I have highlighted the box, tried overtyping, hitting delete, hitting back-space, but nothing happens..

[ghaakenson]

Sorry, that error is on the ND information worksheet

[ghaakenson]

Never Mind.  I figured it out.  Needed to go back to the very beginning to edit it.  It should have been editable in the pop-up alert to the issue.

[poppasmurf]

I received royalty income for the first time from BB LAND. I do not know why I received this royalty payment as I have no personal involvement with the company. When I enter the royalty payment into turbotax it asks 2 questions about ownership which can only be answered yes. Since I cannot answer yes, turbotax freezes up, and I cannot proceed or get turbotax to do anything.

[swede4444]

Did you receive an answer to this question? I also have oil well income to report. The well doesn't have a standard address with a zip code. But Turbo Tax only has the one form of address that can be entered. We're using the "self-employed" product as my wife is self-employed. 

[DawnC]

Report your oil well income as royalty income.  The zip code is not necessary for your tax return, but you will need to enter a zip code that matches that state the property is located in to e-file without error.   As long as you use a zip code in the same state, you won't get an error.  

TurboTax follows the IRS guidelines for acceptable ZIP codes. If the two-letter state abbreviation doesn't match the ZIP code, you'll receive an error when attempting to e-file.

Solution

If you receive this error:

• Double-check you entered the correct two-letter state code.
• Make sure you've entered the ZIP code in either 5-digit or 9-digit format (for example 12345 or 12345-6789).
• Look up the correct ZIP code for the street address in question.
• @swede4444