I am preparing a tax return for my oil & gas royalty payments for the first time, after inheriting the interests from my mother. I have totaled my severance and ad valorem taxes, and the total is substantially less when compared to the amount my mother’s CPA entered on Schedule E, Line 16 - 2015, 2016, 2017, 2018 - for those respective years. What other taxes would he have included? There are no instructions for Line 16 of Schedule E. Thank you in advance for the help!
I would call the CPA directly and have him walk you through the last few year’s reasoning and calculations. If you have no new wells drilled, then the natural decline of production and the decrease in product prices might be the reasons.
LL: I’m not a CPA, don’t play one on TV. Without digging into my tax returns, could it be that the reason for the substantial difference is a large drop in production and in prices? If the dollar amounts paid for the production in 2015-2018 were fairly flat when compared to the same numbers for 2019, then you are probably correct to question the math.
Good Luck.
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