Hello, we filed an extension for 2024 and I’m just reviewing the returns before filing. I don’t think our CPA deals with mineral rights much, so I had 2 questions:
- Do royalty interests that receive 1099 misc file that as Schedule C or Schedule E?
- Are legal fees for transferring ownership, reviewing DOs, etc. deductible along with severance and property taxes?
Appreciate any help.
Royalties on 1099-Misc are reported on Schedule E. Oil and gas revenues on 1099-NEC are reported on Schedule C. Legal fees which are directly related to the income, such as reviewing division orders and leases, are deductible. Some costs for transferring ownership might have to go to basis and others can be deducted. Your CPA and attorney can best address this in light of Internal Revenue Code.
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Thank you for the response, Tennis!
Be sure and ask your CPA about the depletion credit. Many of them do not understand it or forget to do it unless you ask.
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