Percentage Depletion for trust royalties

Forum|Forum|1 year ago
November 29, 2024
1 reply
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I receive oil and gas royalties that are distributed by an estate trust. As such, these royalties are reported to me via Schedule K-1 (form 1041). I recently learned that I am eligible to take depletion (using the 15% percentage depletion method).

Previously, I had reported this K-1 income under personal income>>Estate/Trust income>>Schedule K-1.

However, it looks like depletion must be recorded on Schedule E page 1, which is not generated when the K-1 is entered this way. Is it appropriate to record the K-1 income under business income? Does it get reported in both sections? Any help is appreciated!

M

Mike9241

oil royalties go in box 5 depletion box 9

i should mention that you can take the larger of cost (IRC SEC 612) or percentage depletion (IRC SEC 613). not sure exactly how the trust is invested in the oil royalty but public ones usually issue a year-end report that provides complete reporting details including the computation of both types of depeletion.

S

srtaylor1317Author

Employee

are you referring to boxes on the K-1? I am a recipient of the K-1; I'm not responsible for generating it. No depletion is recorded in box 9, which I believe is accurate, since depletion is not allowed on the trust's return.