Oil & Gas Royalties input screen

Forum|Forum|4 years ago
March 5, 2022
2 replies
16 views

Can someone explain how exactly to handle oil & gas royalties for entities in Lacerte? I don't understand the need for a "Set", and then "properties" when we are talking about an entity that just simply having passive income from royalties. I have never had a program that has a separate tab for Oil & Gas and is set up this way. Usually it is on the same tab as rentals and you just select "royalties" (This option is available for Individuals in Lacerte even though there is also the Oil & Gas input screen however), and that way i could add additional expenses that related to their O&G business, such as Legal & Professional Fees. With the Oil & Gas input screen, all those additional expense lines are not an option, and it seems like the options are 1) Put all to "other expense" under the property, 2) Put under "overhead expense" under the set or 3) Not specifically tie it to the O&G worksheet and just put it under Other deductions on the Other Sch. K input screen. Is there a wrong answer?

Oil & Gas is the only income this entity has at the moment. What am I missing with this??

I would also like any insight on how to remove the depletion calculation at the entity level - we generally just provide the information to the partners on the K-1 so they have the ability to calculate the depletion at the individual level.

Lacerte Tax

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qbteachmt

Level 15

There are some articles link to this:

https://proconnect.intuit.com/community/federal-taxes/help/corporate-oil-and-gas-frequently-asked-questions/00/5569

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E

Emm1234Author

Level 3

I've reviewed those articles and searched the community using lots of different words to try and find articles, but none of them answer the questions I have asked. Thank you for the link though!

PhoebeRoberts

Intuit Community Champion

This is the minimum-input setup for a multi-state partnership where I calculate tentative depletion in an Excel file.

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Emm1234Author

Level 3

This was helpful! Thank you.

For the Depletion though, I selected for the book depletion line = 4 'Book Depletion' and that removed the amount from the balance sheet and the M-1, because I did not enter anything in the book depletion box in the Oil & Gas schedule, but the federal automatic calculation amount still shows up on the M-2. Is this necessary? Is there a way to remove it? This obviously makes it where my balance sheet is out of balance by that amount.

Basically, I would just like to add depletion amounts as a note to the K-1, and then if they are eligible to take depletion on their individual return, they can.

qbteachmt

Level 15

Your title includes "royalty" and you mention this is passive. That means you have no operating activity, and just have a 1099-Misc for this entity?

https://proconnect.intuit.com/taxprocenter/tax-law-and-news/basic-tax-reporting-of-oil-and-gas-related-activities/

"i could add additional expenses that related to their O&G business, such as Legal & Professional Fees."

Is that a working interest, then?

I guess the question is, what is their Activity? Perhaps those costs are Entity Costs and not related to O&G, even if that is the only cash flow (investment).

https://proconnect.intuit.com/community/federal-taxes/help/partnership-k-1-input-oil-gas/00/3690

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