Can i deduct depletion & production tax on my IRS FORM. Little confused here. I know the depletion can be. But what about production cost
Calculate your depletion deduction. It is 15 percent of your gross royalties (not the net amount you receive - gross means before any taxes or production costs).
Then you also deduct whatever makes gross become net - production costs, taxes paid by producer, etc. Just make sure not to deduct any of your witholdings for state or federal taxes.
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This also applies for Working interest properties.
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