# Depreciation on Non-Producing Royalty Interest

**URL:** https://www.mineralrightsforum.com/t/depreciation-on-non-producing-royalty-interest/46609
**Category:** Accounting and Taxes
**Created:** [May 27, 2019, 7:02pm UTC](https://www.mineralrightsforum.com/t/depreciation-on-non-producing-royalty-interest/46609 "2019-05-27T19:02:09Z")
**Posts on this page:** 4
**Page:** 1

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### Author: ![TwoShoeBeagie7](https://www.mineralrightsforum.com/letter_avatar_proxy/v4/letter/t/ecd19e/32.png) [@TwoShoeBeagie7](https://www.mineralrightsforum.com/u/TwoShoeBeagie7)
#### Post date: [May 27, 2019, 7:02pm UTC](https://www.mineralrightsforum.com/t/depreciation-on-non-producing-royalty-interest/46609/1 "2019-05-27T19:02:09Z")

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Can someone explain if a non-producing NPRI can be depreciated for income tax purposes? Let’s say the following is true in this scenario:

Party “A” purchased a non-producing NPRI from Party “B” for $10,000 in the year 2010. Come 2010 tax time, Party “A” shows the NPRI as an asset. Can the asset be depreciated per real estate property rules even if it’s non-producing, or does there have to be production in order to claim a depletion allowance?

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### Author: ![TennisDaze](https://www.mineralrightsforum.com/letter_avatar_proxy/v4/letter/t/dbc845/32.png) [@TennisDaze](https://www.mineralrightsforum.com/u/TennisDaze)
#### Post date: [May 27, 2019, 7:10pm UTC](https://www.mineralrightsforum.com/t/depreciation-on-non-producing-royalty-interest/46609/2 "2019-05-27T19:10:01Z")

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Minerals are not classified as a depreciable asset under the tax rules. Must be producing to take depletion. You can think of this as the fact that the asset is not disappearing when there is no production. It remains underground waiting for a well to be drilled. Sticks and bricks deteriorate by forces of nature whether or not there is any lease income or use.

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### Author: ![TwoShoeBeagie7](https://www.mineralrightsforum.com/letter_avatar_proxy/v4/letter/t/ecd19e/32.png) [@TwoShoeBeagie7](https://www.mineralrightsforum.com/u/TwoShoeBeagie7)
#### Post date: [May 27, 2019, 7:16pm UTC](https://www.mineralrightsforum.com/t/depreciation-on-non-producing-royalty-interest/46609/3 "2019-05-27T19:16:17Z")

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TennisDaze, you never seem to disappoint. Thanks as always!

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### Author: ![Kenny\_DuBose](https://www.mineralrightsforum.com/user_avatar/www.mineralrightsforum.com/kenny_dubose/32/5102_2.png) [@Kenny\_DuBose](https://www.mineralrightsforum.com/u/Kenny_DuBose)
#### Post date: [May 28, 2019, 2:31pm UTC](https://www.mineralrightsforum.com/t/depreciation-on-non-producing-royalty-interest/46609/4 "2019-05-28T14:31:32Z")

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