Oil and Gas Royalty Deductions

[jsdeck]

In Turbotax Business, how do I enter severance/production taxes, state withholding taxes, and depletion allowance for oil and gas royalties under business deductions for a LLC?

Thanks

[npierson7]

You can list them along with any other taxes paid in the Business Expenses section of Schedule E.

If you are receiving oil royalties TurboTax will automatically calculate the depletion allowance.

For oil and gas royalty owners, percentage depletion is calculated using a rate of 15% of the gross income based on your average daily production of crude oil or natural gas, up to your depletable oil or natural gas quantity.

[gwicklun]

Dear Tax Person,

Inputted my Royalty gas and oil earnings from wells in Montana.  The new TT software asks for an address.  One of our Royalty recipients receives the information and then sends each of us what our earnings totaled for a year.  This person lives in California.  The Trust does not earn any monies from California, but your closing page indicates tax may be required for California.  I will submit a Tax form for Montana, but not for California.  Hope this makes sense and can you advise?

Thank you

[gloriah5200]

You should be listing the state address location of your royalty income instead of the state of residence of the partner who is putting the information together for you.

If there is no royalty income coming from CA and you do not reside in CA, I agree that you should not be required to file a CA return based on this income.

[deltaraider21]

Where do I enter the depletion allowance on 1120s (S Corporation) forms.

[gloriah5200]

Don't deduct depletion for oil and gas properties on line 15 of the Schedule K.

Each shareholder figures his own depletion on oil and gas properties. See the instructions for Schedule K-1, box 17, code R, for the information on oil and gas depletion that must be supplied to the shareholders by the corporation.

The S corporation will report the amounts for each shareholder on Schedule K-1 line 17 code R for each shareholder

For additional information refer to

IRS Instructions for Form 1120S

[PerdunOil]

The entity is a multi member LLC created to aggregate royalty payments.   Will be giving K-1 s to three entities

1. Who and where do I deduct the processing charges?

2. Where do I deduct the property taxes paid in Texas

3. Where do I deduct severance taxes etc.

4. Where do I deduct the normal deprecation.

I am using the Turbo Tax Business Edition and do not see anywhere to deduct these items

[DaveF1006]

Let's start with depreciation and work our way down.

1. If you are working un your Turbo Tax Business Program and working on your 1065 business return, go to federal taxes>deductions>depreciation of assets to report depreciation.
2. To report severance and property taxes, go to federal taxes>deductions>business expenses>taxes and licenses
3. To report processing charges, go to all other expenses and the expense section.