1099-Misc..Royalty Interest Owner

[AZ-Tax]

This is a full page 1099-misc not your average 1099-misc. Has "Royalties (Box 2)", "state taxes" (amt), "Other deduct" (amt) and then "net value" with equals box 2 minus these 2 amts. So is this box 2 reported on Sch E line 4, state taxes is reported on line 16 and other deduct is reported on line 18?

If the TP physically visited the well or wells, does the trip qualify for a deduction on Sch E?

[AJsTax]

The income and

expense lines will work. You most likely can take income depletion also, 15% is normal for oil and gas well.
To visit the well means nothing. What would he do to affect the production of the well? If he is getting royalties, most likely nothing. The oil company does all the work. No deduction for mileage!!!!

[taxxcpa]

Royalty

Be sure you take the 15% depletion on the gross amount before any deductions for severance/production taxes, trucking charges, compression or gathering charges.

If the client is a land owner, he may also have some ad valorem taxes, which he pays directly to the tax collector, to deduct.

Royalty owners do not have to pay a share of any overhead or other expenses -- just the value of the sales minus expenses to get the oil or gas from the wellhead to the delivery point where the sale occurs.

[Davc]

If it's in OK and meets the filing threshold don't for4get the extra 7% additional OK depletion.