How should I enter a 1099-misc that I received for a mineral right lease?

[The Big Daddy]

 Now I am concerned about all the advice so far. There is no land it is simply the mineral rights.

If there was land I would have done all this stuff without confusion but now I am not sure what info is correct.

[The Big Daddy]

Do I do this for something that is simply mineral rights and not the surface rights.  The land is not in my name it is owned by someone else I just have the rights to the gas and oil in the ground

[TeresaM]

If it is mineral rights, and there is no land, this will be reported in the Wages and Income section, from the left menu.

1. Scroll down to Rentals, Royalties, and Farm and click on Show More
2. Click on Start or Revisit for Rental Properties and Royalties (Sch E) 
   
   
   
   Select Royalty and click Continue
   
   
   
   Enter the 1099-MISC as it is written. There will be some boxes without entries, as it is a miscellaneous form and fits many situations. 
   
    

[The Big Daddy]

Its not a Royalty its a Rent and reported in box 1 of the 1099-MISC.

I have found this on the internet. This is a Lease Bonus as I said earlier.

"Lease Bonuses – Normally paid at the time of signing or over the life of the lease, lease bonuses constitute additional income to incentivize the lessor to sign the agreement. This income is treated as rental income and should also be reported on the taxpayer’s Schedule E, line 1."

Is there any professionals that can give me a clear path. The farther I listen the less confidence I have on the guidance I am recieving

[ThomasM125]

The material you reference would indicate the income is rental income and it is reported as such on the Form 1099-MISC you received. When you enter it in TurboTax it will be treated as rental income. From a tax standpoint, I don't know of any significant consequence to reporting it as royalty income versus rental income, either way it will be reported on page one of schedule E and get the same or similar tax treatment. So, it seems to be accpetable to treat it as rental income. @The Big Daddy

[The Big Daddy]

Turbo Tax doesn't like it entered as a royalty because on the 1099-misc the rent is in box 1.

When I try to enter the property as a rental Turbo Tax acts as though there is physical property and everything I enter is actually the details of land owned by someone else.

Maybe the farm thing is the way to go. That came from a different Turbo Tax "Expert" as well.

It sure would be nice to have all "experts" with an absolute answer.

Well is the Farm idea the best? Which one is the best idea and probably right?

[Carl]

I don't know of any significant consequence to reporting it as royalty income versus rental income,

The difference is depreciation vs depletion. So it matters.

[The Big Daddy]

Well that's still not an answer. Turbo Tax falls short on this one. It also says no to reporting it as a royalty before it doesn't tell me what to do with it.

[1099-MISC]

Oil & Gas Royalty Lease $ - reported as Rental Income; coded as "6" Royalty and properly entered in Turbo Tax produces the error message on Line 3 of Schedule E:

"Income from rental real estate {This is NOT rental real estate it is rental lease on Oil and Gas Royalties} and income from royalties must be reported as separate properties on Schedule E."

I have used Turbo Tax for many, many years and I have always reported it this way.  It has never before been an issue.  It is property Linked to the appropriate Oil and Gas property.  Does your program no longer support income from Oil and Gas Leases?  Do you have a fix in place now or soon? Thank you.

[DianeW777]

Yes, if I understand what you are trying to convey,  You have royalties from a oil & gas property and income from a lease for the oil & gas property.  Enter them individually even if you have only one 1099-MISC for both.  Both would be reported on Schedule E but in two different columns like they are two separate properties, even if they are the same property.

You can enter royalties (or rent/lease payments) directly in that section or you can enter it through the 1099-MISC.  Royalties are still reported basically the same way in TurboTax even though it may look slightly different.  

With your return open, search for1099misc (or royalties for direct entry) and select the Jump to link in the search results.

When you enter your 1099-MISC, enter the income in Box 2 - Royalties. On the following screen, choose the source of your royalty income:

• Investment income from property you own – This includes natural resources extracted from your property by a third party who leases your property, as well as royalties from intellectual property that you didn't create yourself. This gets reported on Schedule E.
• Royalty income from your business, including artist royalties or operating a natural resources business (Schedule C) – This includes income from natural resources that you extract from your property as well as royalty payments from intellectual property you created as an inventor, writer, artist, and so forth. This gets reported on Schedule C.

Once you've selected the proper classification, follow the onscreen instructions.

@1099-MISC 

[Frank_1]

Hi, The tax tools box does not exist on my version of Turbo Tax. The options I have are rental income, income from your business, farm rental and nonbusiness income.. which box do I click?

[PaulaM]

Enter in the Rental section and enter the Box 1 amount as rents. Most of the questions won't make sense because it is general used for rental property, however this is the proper place for a lease payment. Be sure to enter the property's location. 

You can use the post office address of the nearest town in the county to which the property belongs if raw land.