I hope some of you who work with oil and gas leases can help me out. I have a client who owns a royalty interest in an oil well. The state withholds severance tax from his payments. I know that the tax is included in his gross income for the purpose of calculating depletion. My question is the severance tax a deduction for income tax purposes?
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In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
Alexis de Tocqueville -
Oil & Gas
The severance tax is deductible on Schedule E.Originally posted by DaveO View Post
As is the legal fees for preparing the lease documents.
And some taxing entities assess property taxes on the expected royalty, and these are deductible also.
And your fee for preparing the Schedule E!Jiggers, EA -
Thanks for the reply
It seemed the logical answer but I couldn't locate specific instructions.In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
Alexis de TocquevilleComment
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And if the well is in OK, don't forget the additional depletion on the OK return.Comment
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