Does Anyone Report Seismic Permit Income on Schedule E

The only answers I have seen regarding reporting Seismic Survey income here is to report as Other Income on 1040 Line 21. OK, that's the easy way out - when you don't know what to do with income stick it there. I prefer not to do this.

I received income for Seismic Permits to conduct seismic surveys on two separate farms (same company, separate payments).  The payment was negotiated and paid to the executor of our farmland and then distributed among the owners, so I did NOT receive a 1099-MISC in my name nor will I. The Executor probably received a 1099-MISC but I do not have a copy and that is not a problem I am trying to resolve, so please do not tell me the Executor should have filed an Estate return, because he didn't and he is not going to.  I did get a copy of the original check sent to executor and it specifies payment for a "Seismic Permit", nothing more. There is no language on the statement with regards to surface damages, etc. My share was $1200/farm.

Clearly according to my favorite resource http://www.strasburger.com/wp-content/uploads/2013/10/Tax-Treatment-of-Damages-and-Easements-in-Oil-... a Seismic Permit is considered as payment for the right to use land for a temporary amount of time, therefore it is a rental activity and is taxable as ordinary income. Some will say it should be treated as Surface Damages and reduce land basis. I believe it should be reported on Schedule E as a rental activity.  I already have an entry for a Temporary Easement on Schedule E for the same tax year (which in the contract letter did specify a 90 day time period - for that, my share was paid directly to me not through the executor).  Reporting on Schedule E allows me to identify the Seismic income for each farm land separately and subtract any expenses (although I have no expenses, such as notary fees for this case, so that is moot point).  We do have Farm Rental income for these farms reported on 4835 forms, but this is not really Miscellaneous Farm Rental income because it is not payment for Crop Damages so I am not reporting it there.

I know how to create a line 3 Rents Received Entry with Type = 8 "Other" and then specify a label for the Other "Seismic Permit" in TurboTax. That's not my issue.

What I am struggling with: I have to enter the number of Fair Rental Days else TurboTax will barf and this number is displayed prominently on Schedule E page 1.  I have no idea how many days the permit was for if it was even specified. Nothing in my scant documentation says anything about this.  Should I just make a guess and say 30 days?  Should I put 0 or maybe 365 days?  I don't think Fair Rental days really applies here, nor do I think TurboTax will do any pro-ration or other checks as it does for a Real Rental Property.  Looking for advice on this specific question. Or maybe my question is: Does anybody know what is a typical/reasonable time period for a seismic permit?

Answer

I know absolutely nothing about seismic permits, but wouldn't the exploration company have had to obtain a permit from the local town or county as well?  Wouldn't they have had to specify the location and duration of their planned seismic survey? Perhaps you might check with your local town or county government.  Just a thought.

Was this answer helpful? Yes No
Default user avatars original
SuperUser

No answers have been posted

More Actions

People come to TurboTax AnswerXchange for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:

  1. Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
  2. Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
  3. Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
  4. Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
  5. Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.

Select a file to attach:

Do you still have a question?

Ask your question to the community. Most questions get a response in about a day.

Post your question to the community
Ttse