oil and Gas Royalty Depreciation Allowance

In order to report percentage depletion to the partners on Form 1065 Schedule K-1, you will need to generate the Supplemental Information attachment for Schedule K-1 using Forms Mode. Do not enter depletion as an expense under Deductions in the main step-by-step interview.

Note: you will be making entries to more than one worksheet. Be sure you're in the correct worksheet for each step.

1. Click the Forms icon in the TurboTax header.
2. Look for Form 1065 p5-6 in the left column. Click the form name to open it in the large window. 
3. Scroll down to Line 20(a)(E).
4. Click the drop-down to the left of the first empty line (highlighted in yellow) and select "T". TurboTax automatically enters the description for depletion with an asterisk. Enter the total amount to be allocated to the partners.
5. Now open a Schedule K-1 [name of partner].
6. Scroll down below Line 23 to the Supplemental Information Smart Worksheet. Enter "Line 20-T" and a description. Then enter the amount allocated to this partner. (TurboTax does not calculate this for you.)
7. Repeat Step 5 & 6 for each partner. Leave all forms open until you review the results.
8. To see Schedule K-1 and the attachment, print preview the form (in the menu bar, click File >> Print (Schedule K-1 will appear) >> Print Preview). Additional information will appear on a separate sheet after Schedule K-1, with the entry you made.
9. When you're finished, click "Step-by-Step" in the header to return to the interview.