K-1 Income from Oil - Depletion?

[zeros]

I have a couple of clients who get a k-1 each year and I add it to income but was wondering now if I have to be concerned about depletion. Or is that done at the K-1 level?

[Burke]

It can be part of a K-1. Do you have a K-1 input worksheet in your software? It should handle it.

[Bees Knees]

Depletion is usually not included on the K-1 because the percentage depletion limitations apply at the partner or s corp shareholder level.

TTB page 9-22 says:

Oil and gas depletion for partnerships and S corporations.
Each partner or shareholder computes the depletion deduction
separately and decides whether to use cost or percentage
depletion on the individual tax return. Basis in the partnership
or S corporation must be reduced by the depletion allowed or
allowable each year. The 65% limitation (based on the taxpayer’s
income from all sources) applies if percentage depletion is used.
Exception: Electing large partnerships calculate depletion at the
partnership level.