EOG has sent me a Form 1099 for 2012 indicating that I received a certain dollar value for my royalties. The problem is that the value they show on the 1099 is the gross amount and what they actually paid me was a net amount which had "Other Deductions" and "Production Taxes" taken out of the gross amount.

The "Other Deductions" was a conglomerate of many little amounts for various things, and I have no idea what the "Production Taxes" are about and who actually received this money. My problem is that I am supposed to pay income taxes on the total gross amount, since that is what is shown in the 1099 box 2, and I never received that amount. Does someone on this forum have an explanation for why this is shown this way?

Also for the people who are wondering if EOG is ever going to pay them their royalties, my situation is that I got my first royalty check for four wells in December 2012 after the wells had been producing since May 2012. And up to the time that I got the Division Orders (in December), I had no idea that there were any wells that had been drilled.

Dusky Johnson

There was a thread on this topic recently. Do a search in the upper right hand corner to see if you can find it. Also, I have an article on the Home page with Internet Resources, and it links some tax related info.


Your taxes should be deducted on Sch. E and the income listed on the same form as royalties.