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Intangible drilling costs from K-1 partnership incorrectly showing on Self-employment tax worksheet

I have an oil and gas investment that started in 2024 and incurred 59(e)(2) intangible drilling costs in 2024.  I received a K-1, and I am a passive participant in the partnership.  Income for this oil & gas partnership didn't start until this year 2025, so only the drilling expenses are to be reported in 2024.  Turbo Tax lists the oil & gas investment on Schedule E with $0 royalty income (correct), but it appears that it put the drilling expenses in the Schedule SE worksheet and reduced my separate Schedule C business income by that amount and incorrectly reduced my self-employment tax owed on that separate business.  I was expecting the drilling costs to show in Schedule E.

How do I correct Turbo Tax to *not* put the drilling expenses in the SE tax worksheet?  I need to produce an accurate SE tax form.  Or, please advise if Turbo Tax did it correctly and Why.  Thank you.

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1 Reply

Intangible drilling costs from K-1 partnership incorrectly showing on Self-employment tax worksheet

Still hoping for an answer to the above question.

 

I did find a checkbox on the TT Forms view on the Schedule K-1 Partnership Additional Information for (K1P Addl Info 1), Box 12: Section 179 deduction, line 5 to Check to reduce self-employment income by Section 179 deduction, unreimbursed expenses, depletion, and intangible drilling costs.

 

I unchecked that box, and the intangible drilling costs were excluded from the SE tax deduction.

But what is correct?  Checking the box, or unchecking that Section 179 box?  What is the scenario in which you would choose Yes/No for that box?

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