For a working interest Oil and Gas partnership (Schedule K1 Form 1065) I need to add depreciation for the Tangible Drilling Cost (TDC) that are eligible for bonus / special 1st year depreciation in 2025 (One Big Beautiful Bill Act).
I'm using TurboTax Premier Desktop
After I add my K1, the first issue is that I found no way to get the questionnaire to add a Form 4562 for depreciation. However in the forms view I could add this manually.
The second blocking issue I have is that when I try to edit that Form 4562, some of the boxes won't allow me to enter anything. I can put the special depreciation in box 14 (Part II) but it's not flowing through to part IV so I have no total ultimately.
Ultimately the form 4562 just isn't working properly with Schedule K-1
Tangible Drilling Costs are not typically reported as a line item on Schedule K-1. Instead, the partnership calculates the depreciation (usually via MACRS over 7 years) and includes that deduction in the Ordinary Business Income (Loss) reported in Schedule K-1 Box 1. You may wish to contact the company that prepared the company tax return to confirm the TDC depreciation was included in Box 1 and inquire what method was used for this depreciation.
If, however, TDC depreciation was NOT included in Box 1 and the K-1 does not report this expense, you would need to set up a Schedule C business in TurboTax to track the TDC as a business asset, which then could be depreciated using whatever method you choose. Form 4562 is linked to the Asset Worksheets of your business and cannot be manually completed.
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