1099-MISC FOR ROYALITY ON OILANDGAS

[MTRCH]

BOX 2 SHOWS GROSS AMOUNT BUT NET WAS LOWER DUE TO AD VALOREM TAXES.

HOW DO I HANDLE THIS AMOUNT DIFFERENCE? AS THE LAST THING TURBO TAX SHOWS IS NET AMOUNT VERBIAGE  FOR ROYALITY BUT IT REALLY ISNT.

[ErnieS0]

TurboTax allows you to enter expenses when reporting royalty income, including a deduction for depletion. Enter your ad valorem tax as personal property tax.

[mesquitebean]

---

@ ErnieS0 wrote:

TurboTax allows you to enter expenses when reporting royalty income, including a deduction for depletion. Enter your ad valorem tax as personal property tax.

I can't tell if what user called an "ad valorem" tax is a deduction from his royalty payments (i.e., taken out of each check like a production tax) or an annual tax assessment like a county royalty property tax, etc.  And I'm sure some things are different from state to state.

I'm a fellow user, not a tax person, but wouldn't any royalty taxes (production tax or royal property tax) be a royalty expense (i.e., investment property expense) deducted on Schedule E?   I'm not familiar with the image you showed, but I'm using the desktop version.   Is that checklist you provided what one sees online for Schedule E?   Maybe it leads to the same end result and reporting.  Does your image flow to the Schedule E, Line 16?  If so, then we're likely on the same wavelength.  I've just never referred to it as a personal property tax, so that threw me off a bit.

In the desktop product, I personally enter my county's annual royalty property tax and also any production taxes (severance, etc.) on Schedule E in the Royalty Expenses interview using the screens below (desktop version).  I attached the second screen image in case user has additional deductions taken out of his royalty payments that he needs to report.

Again, I'm just a fellow user, not a tax person, but that's been my method for royalty property.   Perhaps it's the same end result but structured differently if yours was from Online TurboTax.  I don't know what version the user is using.

.

.

[mesquitebean]

@MTRCH  and @ErnieS0 

I apologize if I confused things needlessly above.   I'm using the desktop product, and  I wasn't used to Ernie's image, and the words "personal property tax" threw me off.   I have since examined the Online version's interview for Royalty Expenses and see where he got that image, and it's more clear what's going on in the broader page there.   I suspect his image and mine above both flow to the same place; i.e., Schedule E, Line 16.   So I think we're on the same wavelength, just different formats.

If you are using the desktop version, however, then maybe my images will help a little.

[MTRCH]

Ernie,

under expenses for royalty, I don't have a Other taxes personal property selection.

I do have a taxes option but when I use that it brings up lender name.

I may be looking in the wrong area but my screen doesn't look like the one you attached. I am using turbo tax via CD purchased and loaded onto my computer.

[mesquitebean]

@ MTRCH   

I'm a fellow user, not a tax person.  It's possible  @ ErnieS0  may respond, too.

Ernie's image was a checklist from Online TurboTax.  My image below is from desktop Deluxe--the Windows version.   I, too, do not have a box called "Personal property tax."  Just the box labeled "Taxes", but as you'll see in my image it is linked to the Schedule E Worksheet, Line 16b "other taxes."

What edition are you using, and is it for Windows or Mac?

The Mac software may look a bit different and have some different functionality. 

Do you have a "royalty expenses" screen similar to this?    See the explanation on the image below:

.

.

• No matter what boxes you enter on that Royalty Expenses screen, the next screen in the interview asks about "Report Mortgage Interest" and has Lender Name.    If you have no Mortgage Interest in regard to the royalty property, just leave it blank and click DONE to get past that screen.
• Then the next screen asks "Any other interest paid?" (in regard to the royalty property.)   If none, just click Continue.
• Then you get to the screen "Any Miscellaneous Expenses?" that is shown in one of my images earlier in this thread.