topic Sale of mineral rights - depletion recapture in Deductions & credits

Sale of mineral rights - depletion recapture

Bridgesh73 — Mon, 09 Feb 2026 04:05:09 GMT

I have the sale of inherited mineral rights. These were producing minerals. Inherited 5 years ago and sold this year. I have a basis calculation from date of inheritance. My understanding is the sale is reported on Form 8949.

I also understand that i should recapture the depletion expense that was recognized. It appears this is done on Form 4797. I cannot determine how to accomplish this in Turbo Tax.

Please see this section in the Form 4797 instructions:

Disposition of Depreciable Property Not Used in Trade or Business

Please help

Re: Sale of mineral rights - depletion recapture

Mike9241 — Mon, 09 Feb 2026 07:41:11 GMT

Go to the business income section and then use the link for the sale of business property

Check the box for the sale of business property

You'll see on the next screen that the sale of mineral property is listed

Click yes or continue

On the line for depreciation, enter the cost depletion taken (% depletion is NOT recapturable)

Re: Sale of mineral rights - depletion recapture

Bridgesh73 — Tue, 10 Feb 2026 05:18:05 GMT

Are you sure the percentage depletion is not recaptured?

IRC § 1254 clearly states you use an adjusted basis. Adjusted Basis would take into account the depletion recapture to my understanding.

Re: Sale of mineral rights - depletion recapture

PaulaM — Tue, 10 Feb 2026 23:09:48 GMT

Even though the mineral rights were inherited, once depletion has been claimed the sale is not reported on Form 8949. When mineral property has depletion, the sale is subject IRC§1254, which requires the transaction to be reported on Form 4797.

The depletion allowed/allowable is recaptured as ordinary income on Form 4797, Part III. The remaining gain, if any, flows from 4797 to Schedule D. The recaptured depletion flows from 4797 to Schedule 1, then onto line 8 of your 1040.

In TurboTax, enter the sale through the Rental & Royalty Income section, if you had the property previously listed there. Otherwise, go to the Sale of Business Property section. You'll enter its basis when inherited, sales price and confirm the depletion amounts.

@Bridgesh73