Working Interest in Oil, IDC for S Corp

[DaveinTexas]

Taxpayer owns S Corp, 100%. S Corp invests in a oil JV; S Corp has working interest in this oil well.

K-1 is reported to S Corp reporting IDC, Intangible Drilling Costs on line 13 of the K-1 from the partnership. I know how to report IDCs on an individual return; Sch E, line 28(h) and it may be subject to an AMT adjustment.

How do I report the IDC that is reported as a deduction on a K-1 to the S Corp owned by the taxpayer? Is the expense taken on the 1120S and if so, how? I am trying to figure out if these figures pass through to the shareholder on his Sch E or if they are a deduction for the S Corp.

TIA

[joanmcq]

Is it a JV or a partnership?

[DaveinTexas]

It is a partnership

Is it a JV or a partnership?

The S Corp is a General Partner, working interest, in an oil well.

[BOB W]

This would just be a passthrough on the K-1, SE and all.

[DaveinTexas]

Thanks Bob

This would just be a passthrough on the K-1, SE and all.

for the response. I did figure out that it is a passthrough on the K-1, box 12, code I if I remember correctly.

Did you also mean that any ordinary income from the K-1 passing from a General Partnership to an S Corp and eventually to the shareholder will be taxed as income subject to SE tax?

Thanks.

[BOB W]

for the response. I did figure out that it is a passthrough on the K-1, box 12, code I if I remember correctly.

Did you also mean that any ordinary income from the K-1 passing from a General Partnership to an S Corp and eventually to the shareholder will be taxed as income subject to SE tax?

Thanks.

Working Oil Wells are considered Self employed income, so any profit is subject to SE taxes..Any loss would offset other SE source income.