I received a 1099-Misc for oil leasing rights to my property. The value is listed under "rents" and I put the value in accordingly, but when I go through the TurboTax questionnaire I answer as if it's a royalty. Is this right? I receive errors at the end with Smart Check by doing this method because TT thinks I'm renting my property.
Taxpayers typically receive a lease bonus from the party that extracts the natural resource in consideration for granting the lease. The amount of bonus payments is “Rents” in Box 1 of the 1099-MISC and you report the income as rent on Schedule E.
- Enter your 1099-MISC for rents in the 1099-MISC section as it appears.
- Check that it is for Rental income from the rental of real estate (Schedule E)
- Add Lease Bonus on the screen to select the rental or royalty that generated this income, and check that.
- Continue through the rest of the section.
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Thanks for the help on answering the first part of the Lease Bonus payment. Can you please address how to work thru setting up the Schedule E part of the program. The questions seem to be geared toward a traditional rental (like house rental) but in our case it's a one time payment to the right to drill on our land/mineral rights. Thanks in advance for your help.