depletion

Forum|Forum|1 year ago
September 17, 2024
4 replies
14 views

My client has royalty income from a trust. Where is depletion reported? And what are the steps in proconnect to get the deduction in the right place on the proper form?

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sjrcpa

Level 15

Same place as the royalty income. Schedule E page 1.

The more I know the more I don’t know.

PhoebeRoberts

Intuit Community Champion

Your client has a Form 1041 Sch K-1, reporting oil & gas royalty income (probably as a component of Line 5)? Use the O&G input section.

Your client has a publicly traded investment in something called a royalty trust? Ask them to give you the five bazillion page booklet explaining how to calculate all the numbers. It tells you exactly what line everything should show up on.

N

nacbarbourAuthor

Level 2

When I include depletion on Sch E part 1 as suggested, the depletion is limited due to passive activity loss limitations while the income is not allowed as an offset. Why? Seems that the royalty income should appear on Sch E page 2, Part III and the depletion should be a deduction in that same area.

sjrcpa

Level 15

There should be a box to check, or similar, to get the Royalty income on Schedule E page 1.

The more I know the more I don’t know.

N

nacbarbourAuthor

Level 2

If I check the box, the depletion amount gets added to the 8582 as a passive loss while the royalty income is not characterized as passive income such that depletion would be fully deductible.