Depletion Allowance showing on Form 8582

[dmjwoodlands]

I get royalty income (not working interest).  TT computes depletion allowance apparently when the K-1 has a code T in Box 20.  The depletion allowance is added to passive losses on Form 8582 incorrectly.  The depletion should show on Schedule E, which can be entered manually.  Another poster suggested removing Code T when entering the K-1 detail, but that does not seem to change the data in Form 8582.  How can the Form 8582 be corrected (it does not allow manual edits)?  The additional expense results in an incorrect passive loss computation.

[DaveF1006]

It depends.  To clarify, where does the entry appear in form 8582 and how should it appear correctly?

[dmjwoodlands · Accepted solution]

So, I was able to fix the depletion allowance and royalty income issue related to improperly showing on Form 8582.  First I had to report royalties on a different line of the K-1 despite the way it was reported to me (there is a specific line for royalties) and I had to correct the K-1 supporting page which is appears to auto-populate when it sees Code T in box 20.  Simply remove the depletion allowance information on the supporting schedule.  Then it is only reported on Schedule E as required.

[dmjwoodlands]

TT was treating the net royalty income and depletion allowance as a passive property, just like rental properties.  The income was treated as current passive income and the depletion as a current non-deductible passive loss to be carried forward.