Lives in Minnesota - Oil Income from North Dakota - Other Expenses?

[zeros]

Client lives in Minnesota and received a 1099-Misc (schedule E) for oil income in North Dakota. Can I presume that a ND return would have to be filed? Any there any deductions that would pertain to this type of income?

[Traveling EA]

oil income

Perhaps depletion?

[Bees Knees]

Client lives in Minnesota and received a 1099-Misc (schedule E) for oil income in North Dakota. Can I presume that a ND return would have to be filed?

Maybe yes, maybe no. It depends on the amount of income.

The nice thing about TheTaxBook All States edition is it gives you the filing requirements for each state for non-residents who earn income in that state.

[rtsietsema]

File return

ND requires a tax return in this case. See the following from ND dept of revenue:

Income from oil, gas, and other mineral interests
An individual who is a nonresident
of North Dakota is subject to North Dakota income tax on income derived from tangible property located in North Dakota. An ownership interest in oil, gas, or other mineral deposit in North Dakota constitutes a tangible property (real property) interest in North Dakota. Therefore, income that a nonresident individual receives from an oil, gas,
and mineral lease contract is subject to North Dakota income tax.

There is some reciprocity for MN and ND residents, but that does not apply here.

[Edward]

Client lives in Minnesota and received a 1099-Misc (schedule E) for oil income in North Dakota. Can I presume that a ND return would have to be filed? Any there any deductions that would pertain to this type of income?

Which box have they checked on the 1099-Misc - rents, Box 1 for Rents (Bonus Payment) and no deductions. royalties, box 2 for royalties with ammortization (15%) with few other deductions as provided by the company; working interest box 7 (non-employee compensation) subject to SE taxes with other deductions as provided by the company, as well as Joint Billing expenses (if applicable) paid by the taxpayer. Most states do require the filing of a State Return.