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I received a 1099-MISC for executing a mineral rights lease agreement (oil & gas). Should I report this as a "rent from a rental property" or as a "royalty" payment?

Forum|Forum|7 years ago
June 6, 2019
3 replies
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The 1099-Misc classifies the income as "rents", but when I enter this into TurboTax, it seems to assume that I am a landlord with tenants, expenses, etc.

TurboTax Premier Windows

Best answer by DawnC0

Oil, gas, and timber are natural resource royalties. Both Rental and Royalty Income go on Schedule E, so your 1099-MISC should be entered by going to Federal (left menu), Wages and Income (top menu), Rentals, Royalties and Farms, then ''Rental Properties and Royalties (Sch E)'', instead of the 'Other Common Income' section. If you enter it in the Other Common Income section, you will be prompted to link the 1099-MISC to a schedule E property. So you will need to complete that section at some point before you can file your return.

If you go through the Rental and Royalty Income section first, you can set up the property information to reflect it as a gas and oil producing property before you enter the income..

DawnC0Answer

Employee

Oil, gas, and timber are natural resource royalties. Both Rental and Royalty Income go on Schedule E, so your 1099-MISC should be entered by going to Federal (left menu), Wages and Income (top menu), Rentals, Royalties and Farms, then ''Rental Properties and Royalties (Sch E)'', instead of the 'Other Common Income' section. If you enter it in the Other Common Income section, you will be prompted to link the 1099-MISC to a schedule E property. So you will need to complete that section at some point before you can file your return.

If you go through the Rental and Royalty Income section first, you can set up the property information to reflect it as a gas and oil producing property before you enter the income..

D

dpalderson

When I check the "royalty property or payment" box as shown in the screen image my lease bonus income does not appear on Schedule E.

A

arbo

i rent part of my property for the gas company to run their pipes across, they sent me a 1099 for rent, how do I report this on my income tax

Carl11_2

Employee

If you have a 1099-MISC that has income reported in both box 1 and box 2, then you will treat it as if you received two physically separate 1099-MISC forms, with one reporting income in box 1, and the other reporting the income in box 2.

Take note that when entering the 2nd one into TurboTax, your "description" for the box 2 1099-MISC must not be the same as the description for the box 1 1099-MISC. When done, the rental income of box 1 will be reported in column A of the SCH E, and the royalty income of box 2 will be reported in column B of the same SCH E.

G

ghaakenson

I do not understand. I have samll income from oil and gas mineral rights lease in North Dakota. I live in North Carolina. Turbo tax asks for "Address" the address on 1099 MISC is the company address in Texas. I have had ND withholding taxes withheld. It's SMALL amount. I would just use the leasing companies address, except it is in a different state than the drilling. This should not be that complicated.