Oil and Gas Lease Bonus - Need guidance on filling out the Schedule E screens

[MichWoman]

Received oil and gas lease bonus (reported in box 1 of 1099  MISC).  Have entered the info in the 1099 MISC section of TT.  Could use some guidance in filling out the corresponding Schedule E.

In the Schedule E portion, these are the steps I have done:

1.  Select "Rental property."

2.  For property description, enter "Oil and Gas Lease Bonus." 

3.  Question "What type of rental?"   Select "Other" and enter "O&G Lease Bonus"

4.  Questions about New, Sold, Rented, Converted, Carryovers.  Select "None of the above."

5.  Questions about number of days rented in 2019.  Count the number of days from the time check written to end of 2019.

Does that sound right?

[HelenC12]

Please see the following TurboTax FAQ on how to enter Royalty income not Rental income.

To enter a 1099-MISC for royalty income:

With your return open, search for 1099-MISC 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.

[MichWoman]

The 1099 MISC is for a lease bonus and reports the amount in Box 1, rents.  I assumed that meant it was treated as rental income; is that not the case?

[MichWoman]

The 1099 MISC is for a lease bonus and reports the amount in Box 1, rents.  I assumed that meant it was treated as rental income; is that not the case?

[DeanM15 · Accepted solution]

If the 1099 MISC has a figure in Box 1, you do need to treat the income as rental income. From your first post, it looks like you have a good handle on it. 

As far as Number 5 goes, we could argue about if it was rented for the whole year or just part. As long as the figure stays positive, we really do not need to worry about it. 

[Ohio1]

Are mortgage interest and property taxes considered a cost and deductible? 

[Ohio1]

Were you able to deduct mortgage interest and personal property?

[DaveF1006]

It depends. Keep in mind, only the only mortgage interest and property taxes that are deductible are for the land portion that is leased. Any expense regarding your personal residence or the remainder of your property is not deductible. Please read this IRS link for further guidance.  

[Pumper1940]

It’s not the bonus I needed help with all I needed was to change perentage of ownership from 10 % to 0

[MarilynG1]

If you Edit your royalty in TurboTax Online, you get a screen asking 'Do any of these uncommon situations apply to you?'  

If your 1099-Misc reports only your share of the Royalty Income, answer NO. 

If you are distributing part of your 1099-Misc amount to another person, then you would enter an ownership %.