imjulier Posted May 18, 2010 Report Share Posted May 18, 2010 Help! I have a client with a partnership K-1 for oil & gas....yuck. Box 20T provides a statement with depletion information. It says total percentage depletion is $3,515 (subject to 65% taxable income limitation). What is this 65% limit? Also, statement says that all of the depletion is in excess of basis. Does this make the depletion not allowable so no entry on the tax return? If allowed, how do I enter this in ATX? I'm thinking about using a seperate line on Sch E, pg. 2. Any help is greatly appreciated. Thanks, Julie Quote Link to comment Share on other sites More sharing options...
taxxcpa Posted May 18, 2010 Report Share Posted May 18, 2010 Help! I have a client with a partnership K-1 for oil & gas....yuck. Box 20T provides a statement with depletion information. It says total percentage depletion is $3,515 (subject to 65% taxable income limitation). What is this 65% limit? Also, statement says that all of the depletion is in excess of basis. Does this make the depletion not allowable so no entry on the tax return? If allowed, how do I enter this in ATX? I'm thinking about using a seperate line on Sch E, pg. 2. Any help is greatly appreciated. Thanks, Julie I don't know about ATX, but what they probably mean is that the $3515 is 15% of gross income, but if the taxable income is less than $ 3515 you can take no more than the client's taxable income; i.e. you cannot create a NOL with depletion. 1 Quote Link to comment Share on other sites More sharing options...
Joel Posted May 18, 2010 Report Share Posted May 18, 2010 See attachment. Assuming the income on line 1 of the k-1 is sufficient, I make a new k-1 entry with the name of the partnership and "depletion" and enter it as a loss on line 1.Depletiion Allowance.pdf Quote Link to comment Share on other sites More sharing options...
Joel Posted May 18, 2010 Report Share Posted May 18, 2010 Sorry about the lopsided attachment. Quote Link to comment Share on other sites More sharing options...
taxxcpa Posted May 18, 2010 Report Share Posted May 18, 2010 Sorry about the lopsided attachment. Although I did not use ATX, I ended up with the royalty from a partnership shown on Schedule E and the depletion shown on the line for depreciation and depletion. I think I just entered the K-1 info and the figures flowed to the proper forms. The partnership was a law firm that only had a small amount of royalty Quote Link to comment Share on other sites More sharing options...
imjulier Posted May 18, 2010 Author Report Share Posted May 18, 2010 Thanks Joel and taxxcpa- Good information...I think I'll be following Joel's method since I'm not sure the k-1 represents roylaties (its an operating company) and its consistent with my first thought of putting it on pg 2 of E with a seperate entry. Thanks again for your input. Julie Quote Link to comment Share on other sites More sharing options...
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