Virginia, thanks for your offer. Will email you offline. And thanks so much for your help.
Virginia, all,
How do I figure out my mineral depletion deduction on my federal taxes? I have all of my royalty production statements for the year BUT I really have no idea how to determine the value. If you have a link or other information that would be helpful that would be great. Also would I claim any depletion on the first year of production?
Thanks. Jay
Jay,
Wish I could help, but my CPA does that for me. I think it’s a percentage of the total. You may look under federal tax online and see if it says anything about depletion tax. My taxes are such a mess that I only look at what he puts in the boxes to be sure that is right and hope he does everything else O.K.
Yes, the depletion deduction is on Line 18 of Schedule E of Form 1040. Last year, it was 15%, if I recall correctly. I don’t know what it is for 2013. Presumably, for those states that also tax income, there is a depletion deduction as well. Depending upon how much royalty income one has, a 15% deduction from taxation can add up nicely!