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1040ez online form Publication 547(SP) - Introductory Material Table of Contents Qué Hay de Nuevo Recordatorios IntroductionCómo pedir formularios y publicaciones. 1040ez online form Preguntas sobre los impuestos. 1040ez online form Useful Items - You may want to see: Qué Hay de Nuevo Nueva Sección C en el Formulario 4684 para esquemas de inversión de tipo Ponzi (Ponzi-type schemes). 1040ez online form  La Sección C del Formulario 4684 (disponible en inglés) es nueva para el año 2013. 1040ez online form Usted debe completar la Seción C si está reclamando una deducción de pérdida por robo debido a un esquema de inversión de tipo Ponzi (Ponzi-type scheme) y estará usando el Procedimiento Tributario (Revenue Procedure) 2009-20, según modificado por el Procedimiento Tributario (Revenue Procedure) 2011-58. 1040ez online form La Sección C del Formulario 4864 reemplaza el Anexo A del Procedimiento Tributario (Revenue Procedure) 2009-20. 1040ez online form No necesita completar el Anexo A. 1040ez online form Para más información, vea Pérdidas provenientes de esquemas de inversión de tipo Ponzi (Ponzi-type schemes) , más adelante. 1040ez online form Recordatorios Acontecimientos futuros. 1040ez online form  Si desea obtener la información más reciente sobre los acontecimientos relacionados con la Publicación 547(SP), tal como legislación promulgada después que ésta fue impresa, acceda a www. 1040ez online form irs. 1040ez online form gov/Spanish/About-Publication-547(SP). 1040ez online form Fotografías de niños desaparecidos. 1040ez online form  El Servicio de Impuestos Internos (IRS, por sus siglas en inglés) se enorgullece en colaborar con el Centro Nacional de Niños Desaparecidos y Explotados (National Center for Missing and Exploited Children). 1040ez online form En esta publicación, pueden aparecer fotografías de niños desaparecidos que han sido seleccionadas por el Centro. 1040ez online form Estas fotografías aparecen en páginas que de otra manera estarían en blanco. 1040ez online form Usted puede ayudar a que estos niños regresen a sus hogares si identifica alguno de ellos y llama gratis al 1-800-THE-LOST (1-800-843-5678). 1040ez online form Introduction Esta publicación explica el trato tributario de casos de hechos fortuitos, robos y pérdidas de depósitos monetarios. 1040ez online form Un hecho fortuito ocurre cuando su propiedad resulta dañada por causa de algún desastre, como por ejemplo, una tormenta, un incendio, un accidente automovilístico u otro suceso de esta índole. 1040ez online form Un robo ocurre cuando alguien hurta sus bienes. 1040ez online form La pérdida de depósitos monetarios ocurre cuando su institución bancaria se declara insolvente o en quiebra (bancarrota). 1040ez online form Esta publicación aborda los siguientes temas: Definiciones de hecho fortuito, robo y pérdida de depósitos monetarios. 1040ez online form Cómo calcular el monto de su pérdida o ganancia. 1040ez online form Cómo se tratan tributariamente seguros y otros reembolsos que reciba. 1040ez online form Límites de la deducción. 1040ez online form Cómo y cuándo declarar un caso de hecho fortuito o robo. 1040ez online form Reglas especiales para pérdidas en zonas de desastre. 1040ez online form Formularios que tiene que presentar. 1040ez online form   Normalmente, si es víctima de un hecho fortuito o robo, tiene que presentar el Formulario 4684 (disponible sólo en inglés). 1040ez online form Asimismo, es posible que tenga que presentar uno o más de los siguientes formularios (todos en inglés): Anexo A (Formulario 1040). 1040ez online form Formulario 1040NR, Anexo A (para extranjeros no residentes). 1040ez online form Anexo D. 1040ez online form Formulario 4797. 1040ez online form Para información adicional sobre qué formulario utilizar, vea más adelante la sección sobre Cómo Declarar Pérdidas y Ganancias . 1040ez online form Expropiaciones forzosas. 1040ez online form   Para obtener información sobre expropiaciones forzosas de propiedades, vea el tema Involuntary Conversions (Conversiones involuntarias) en el capítulo 1 de la Publicación 544, Sales and Other Dispositions of Assets (Ventas y otras enajenaciones de activos), en inglés. 1040ez online form Registros para el cálculo de pérdidas por hecho fortuito y robo. 1040ez online form   La Publicación 584SP, Registro de Pérdidas por Hechos Fortuitos (Imprevistos), Desastres y Robos (Propiedad de uso Personal) está a su disposición para ayudarle a hacer una lista de artículos de sus bienes de uso personal que hayan sido robados o dañados y calcular su pérdida. 1040ez online form En dicha publicación se incluyen tablas para ayudarle a calcular el monto de las pérdidas de su vivienda, artículos de la misma y vehículos motorizados. 1040ez online form   La Publicación 584-B, Business Casualty, Disaster, and Theft Loss Workbook (Registro de pérdidas por hechos fortuitos, desastres y robos de propiedad de uso comercial), en inglés puede ayudarle a hacer una lista de artículos que hayan sido robados o dañados en su empresa o bienes de generación de ingresos, y calcular su pérdida. 1040ez online form Comentarios y sugerencias. 1040ez online form   Agradecemos sus comentarios y sugerencias sobre esta publicación para ediciones futuras. 1040ez online form   Puede escribirnos a la siguiente dirección: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. 1040ez online form NW, IR-6526 Washington, DC 20224   Contestamos gran parte de correspondencia por teléfono. 1040ez online form Por lo tanto, nos sería útil si en su correspondencia incluye el número telefónico con su código de área donde podemos ubicarlo durante el día. 1040ez online form   Puede enviarnos comentarios a través de www. 1040ez online form irs. 1040ez online form gov/formspubs, pulsando sobre “ Comment on Tax Forms and Publications ” (Comentarios sobre formularios y publicaciones tributarios) bajo el título “ Information about ” (Información sobre), en inglés. 1040ez online form   Aunque no podemos contestar cada uno de los comentarios, agradecemos su opinión y tendremos en cuenta sus comentarios cuando revisemos nuestros productos. 1040ez online form Cómo pedir formularios y publicaciones. 1040ez online form   Visite el sitio web del IRS www. 1040ez online form irs. 1040ez online form gov/espanol y pulse sobre el enlace “Formularios y Publicaciones” para descargar formularios y publicaciones. 1040ez online form Llame al 1-800-829-3676 o escriba a la dirección que aparece a continuación y recibirá respuesta a los 10 días de que el IRS reciba su solicitud: Internal Revenue Service 1201 N. 1040ez online form Mitsubishi Motorway Bloomington, IL 61705-6613 Preguntas sobre los impuestos. 1040ez online form   Si tiene alguna pregunta acerca de sus impuestos, consulte la información disponible en IRS. 1040ez online form gov/espanol o llame al número 1-800-829-1040. 1040ez online form No podemos contestar preguntas sobre impuestos enviadas a las direcciones anteriores. 1040ez online form Useful Items - You may want to see: Publicación 523 Selling Your Home (Venta de su vivienda), en inglés 525 Taxable and Nontaxable Income (Ingresos tributables y no tributables), en inglés 550 Investment Income and Expenses (Ingresos y gastos de inversiones), en inglés 551 Basis of Assets (Base de activos), en inglés 584SP Registro de Pérdidas por Hechos Fortuitos (Imprevistos), Desastres y Robos (Propiedad de Uso Personal) 584-B Business Casualty, Disaster, and Theft Loss Workbook (Registro de pérdidas por hechos fortuitos, desastres y robos comerciales), en inglés  Formulario (e Instrucciones) Anexo A (Formulario 1040) Itemized Deductions (Deducciones detalladas), en inglés Anexo A (Formulario 1040NR) Itemized Deductions (for nonresident aliens) (Deducciones detalladas (para extranjeros no residentes)), en inglés Anexo D (Formulario 1040) Capital Gains and Losses (Pérdidas y ganancias de capital), en inglés 4684 Casualties and Thefts (Hechos fortuitos y robos), en inglés 4797 Sales of Business Property (Ventas de bienes comerciales), en inglés  Para más información sobre cómo obtener publicaciones y formularios, vea la sección Cómo Obtener Ayuda con los Impuestos al final de esta publicación. 1040ez online form Prev  Up  Next   Home   More Online Publications
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The 1040ez Online Form

1040ez online form 9. 1040ez online form   Depletion Table of Contents Introduction Topics - This chapter discusses: Who Can Claim Depletion? Mineral PropertyCost Depletion Percentage Depletion Oil and Gas Wells Mines and Geothermal Deposits Lessor's Gross Income TimberTimber units. 1040ez online form Depletion unit. 1040ez online form Introduction Depletion is the using up of natural resources by mining, drilling, quarrying stone, or cutting timber. 1040ez online form The depletion deduction allows an owner or operator to account for the reduction of a product's reserves. 1040ez online form There are two ways of figuring depletion: cost depletion and percentage depletion. 1040ez online form For mineral property, you generally must use the method that gives you the larger deduction. 1040ez online form For standing timber, you must use cost depletion. 1040ez online form Topics - This chapter discusses: Who can claim depletion Mineral property Timber Who Can Claim Depletion? If you have an economic interest in mineral property or standing timber, you can take a deduction for depletion. 1040ez online form More than one person can have an economic interest in the same mineral deposit or timber. 1040ez online form In the case of leased property, the depletion deduction is divided between the lessor and the lessee. 1040ez online form You have an economic interest if both the following apply. 1040ez online form You have acquired by investment any interest in mineral deposits or standing timber. 1040ez online form You have a legal right to income from the extraction of the mineral or cutting of the timber to which you must look for a return of your capital investment. 1040ez online form A contractual relationship that allows you an economic or monetary advantage from products of the mineral deposit or standing timber is not, in itself, an economic interest. 1040ez online form A production payment carved out of, or retained on the sale of, mineral property is not an economic interest. 1040ez online form Individuals, corporations, estates, and trusts who claim depletion deductions may be liable for alternative minimum tax. 1040ez online form Basis adjustment for depletion. 1040ez online form   You must reduce the basis of your property by the depletion allowed or allowable, whichever is greater. 1040ez online form Mineral Property Mineral property includes oil and gas wells, mines, and other natural deposits (including geothermal deposits). 1040ez online form For this purpose, the term “property” means each separate interest you own in each mineral deposit in each separate tract or parcel of land. 1040ez online form You can treat two or more separate interests as one property or as separate properties. 1040ez online form See section 614 of the Internal Revenue Code and the related regulations for rules on how to treat separate mineral interests. 1040ez online form There are two ways of figuring depletion on mineral property. 1040ez online form Cost depletion. 1040ez online form Percentage depletion. 1040ez online form Generally, you must use the method that gives you the larger deduction. 1040ez online form However, unless you are an independent producer or royalty owner, you generally cannot use percentage depletion for oil and gas wells. 1040ez online form See Oil and Gas Wells , later. 1040ez online form Cost Depletion To figure cost depletion you must first determine the following. 1040ez online form The property's basis for depletion. 1040ez online form The total recoverable units of mineral in the property's natural deposit. 1040ez online form The number of units of mineral sold during the tax year. 1040ez online form Basis for depletion. 1040ez online form   To figure the property's basis for depletion, subtract all the following from the property's adjusted basis. 1040ez online form Amounts recoverable through: Depreciation deductions, Deferred expenses (including deferred exploration and development costs), and Deductions other than depletion. 1040ez online form The residual value of land and improvements at the end of operations. 1040ez online form The cost or value of land acquired for purposes other than mineral production. 1040ez online form Adjusted basis. 1040ez online form   The adjusted basis of your property is your original cost or other basis, plus certain additions and improvements, and minus certain deductions such as depletion allowed or allowable and casualty losses. 1040ez online form Your adjusted basis can never be less than zero. 1040ez online form See Publication 551, Basis of Assets, for more information on adjusted basis. 1040ez online form Total recoverable units. 1040ez online form   The total recoverable units is the sum of the following. 1040ez online form The number of units of mineral remaining at the end of the year (including units recovered but not sold). 1040ez online form The number of units of mineral sold during the tax year (determined under your method of accounting, as explained next). 1040ez online form   You must estimate or determine recoverable units (tons, pounds, ounces, barrels, thousands of cubic feet, or other measure) of mineral products using the current industry method and the most accurate and reliable information you can obtain. 1040ez online form You must include ores and minerals that are developed, in sight, blocked out, or assured. 1040ez online form You must also include probable or prospective ores or minerals that are believed to exist based on good evidence. 1040ez online form But see Elective safe harbor for owners of oil and gas property , later. 1040ez online form Number of units sold. 1040ez online form   You determine the number of units sold during the tax year based on your method of accounting. 1040ez online form Use the following table to make this determination. 1040ez online form    IF you  use . 1040ez online form . 1040ez online form . 1040ez online form THEN the units sold during the year are . 1040ez online form . 1040ez online form . 1040ez online form The cash method of accounting The units sold for which you receive payment during the tax year (regardless of the year of sale). 1040ez online form An accrual method of accounting The units sold based on your inventories and method of accounting for inventory. 1040ez online form   The number of units sold during the tax year does not include any for which depletion deductions were allowed or allowable in earlier years. 1040ez online form Figuring the cost depletion deduction. 1040ez online form   Once you have figured your property's basis for depletion, the total recoverable units, and the number of units sold during the tax year, you can figure your cost depletion deduction by taking the following steps. 1040ez online form Step Action Result 1 Divide your property's basis for depletion by total recoverable units. 1040ez online form Rate per unit. 1040ez online form 2 Multiply the rate per unit by units sold during the tax year. 1040ez online form Cost depletion deduction. 1040ez online form You must keep accounts for the depletion of each property and adjust these accounts each year for units sold and depletion claimed. 1040ez online form Elective safe harbor for owners of oil and gas property. 1040ez online form   Instead of using the method described earlier to determine the total recoverable units, you can use an elective safe harbor. 1040ez online form If you choose the elective safe harbor, the total recoverable units equal 105% of a property's proven reserves (both developed and undeveloped). 1040ez online form For details, see Revenue Procedure 2004-19 on page 563 of Internal Revenue Bulletin 2004-10, available at www. 1040ez online form irs. 1040ez online form gov/pub/irs-irbs/irb04-10. 1040ez online form pdf. 1040ez online form   To make the election, attach a statement to your timely filed (including extensions) original return for the first tax year for which the safe harbor is elected. 1040ez online form The statement must indicate that you are electing the safe harbor provided by Revenue Procedure 2004-19. 1040ez online form The election, if made, is effective for the tax year in which it is made and all later years. 1040ez online form It cannot be revoked for the tax year in which it is elected, but may be revoked in a later year. 1040ez online form Once revoked, it cannot be re-elected for the next 5 years. 1040ez online form Percentage Depletion To figure percentage depletion, you multiply a certain percentage, specified for each mineral, by your gross income from the property during the tax year. 1040ez online form The rates to be used and other rules for oil and gas wells are discussed later under Independent Producers and Royalty Owners and under Natural Gas Wells . 1040ez online form Rates and other rules for percentage depletion of other specific minerals are found later in Mines and Geothermal Deposits . 1040ez online form Gross income. 1040ez online form   When figuring percentage depletion, subtract from your gross income from the property the following amounts. 1040ez online form Any rents or royalties you paid or incurred for the property. 1040ez online form The part of any bonus you paid for a lease on the property allocable to the product sold (or that otherwise gives rise to gross income) for the tax year. 1040ez online form A bonus payment includes amounts you paid as a lessee to satisfy a production payment retained by the lessor. 1040ez online form   Use the following fraction to figure the part of the bonus you must subtract. 1040ez online form No. 1040ez online form of units sold in the tax year Recoverable units from the property × Bonus Payments For oil and gas wells and geothermal deposits, more information about the definition of gross income from the property is under Oil and Gas Wells , later. 1040ez online form For other property, more information about the definition of gross income from the property is under Mines and Geothermal Deposits , later. 1040ez online form Taxable income limit. 1040ez online form   The percentage depletion deduction generally cannot be more than 50% (100% for oil and gas property) of your taxable income from the property figured without the depletion deduction and the domestic production activities deduction. 1040ez online form   Taxable income from the property means gross income from the property minus all allowable deductions (except any deduction for depletion or domestic production activities) attributable to mining processes, including mining transportation. 1040ez online form These deductible items include, but are not limited to, the following. 1040ez online form Operating expenses. 1040ez online form Certain selling expenses. 1040ez online form Administrative and financial overhead. 1040ez online form Depreciation. 1040ez online form Intangible drilling and development costs. 1040ez online form Exploration and development expenditures. 1040ez online form Deductible taxes (see chapter 5), but not taxes that you capitalize or take as a credit. 1040ez online form Losses sustained. 1040ez online form   The following rules apply when figuring your taxable income from the property for purposes of the taxable income limit. 1040ez online form Do not deduct any net operating loss deduction from the gross income from the property. 1040ez online form Corporations do not deduct charitable contributions from the gross income from the property. 1040ez online form If, during the year, you dispose of an item of section 1245 property that was used in connection with mineral property, reduce any allowable deduction for mining expenses by the part of any gain you must report as ordinary income that is allocable to the mineral property. 1040ez online form See section 1. 1040ez online form 613-5(b)(1) of the regulations for information on how to figure the ordinary gain allocable to the property. 1040ez online form Oil and Gas Wells You cannot claim percentage depletion for an oil or gas well unless at least one of the following applies. 1040ez online form You are either an independent producer or a royalty owner. 1040ez online form The well produces natural gas that is either sold under a fixed contract or produced from geopressured brine. 1040ez online form If you are an independent producer or royalty owner, see Independent Producers and Royalty Owners , next. 1040ez online form For information on the depletion deduction for wells that produce natural gas that is either sold under a fixed contract or produced from geopressured brine, see Natural Gas Wells , later. 1040ez online form Independent Producers and Royalty Owners If you are an independent producer or royalty owner, you figure percentage depletion using a rate of 15% of the gross income from the property based on your average daily production of domestic crude oil or domestic natural gas up to your depletable oil or natural gas quantity. 1040ez online form However, certain refiners, as explained next, and certain retailers and transferees of proven oil and gas properties, as explained next, cannot claim percentage depletion. 1040ez online form For information on figuring the deduction, see Figuring percentage depletion , later. 1040ez online form Refiners who cannot claim percentage depletion. 1040ez online form   You cannot claim percentage depletion if you or a related person refine crude oil and you and the related person refined more than 75,000 barrels on any day during the tax year based on average (rather than actual) daily refinery runs for the tax year. 1040ez online form The average daily refinery run is computed by dividing total refinery runs for the tax year by the total number of days in the tax year. 1040ez online form Related person. 1040ez online form   You and another person are related persons if either of you holds a significant ownership interest in the other person or if a third person holds a significant ownership interest in both of you. 1040ez online form For example, a corporation, partnership, estate, or trust and anyone who holds a significant ownership interest in it are related persons. 1040ez online form A partnership and a trust are related persons if one person holds a significant ownership interest in each of them. 1040ez online form For purposes of the related person rules, significant ownership interest means direct or indirect ownership of 5% or more in any one of the following. 1040ez online form The value of the outstanding stock of a corporation. 1040ez online form The interest in the profits or capital of a partnership. 1040ez online form The beneficial interests in an estate or trust. 1040ez online form Any interest owned by or for a corporation, partnership, trust, or estate is considered to be owned directly both by itself and proportionately by its shareholders, partners, or beneficiaries. 1040ez online form Retailers who cannot claim percentage depletion. 1040ez online form   You cannot claim percentage depletion if both the following apply. 1040ez online form You sell oil or natural gas or their by-products directly or through a related person in any of the following situations. 1040ez online form Through a retail outlet operated by you or a related person. 1040ez online form To any person who is required under an agreement with you or a related person to use a trademark, trade name, or service mark or name owned by you or a related person in marketing or distributing oil, natural gas, or their by-products. 1040ez online form To any person given authority under an agreement with you or a related person to occupy any retail outlet owned, leased, or controlled by you or a related person. 1040ez online form The combined gross receipts from sales (not counting resales) of oil, natural gas, or their by-products by all retail outlets taken into account in (1) are more than $5 million for the tax year. 1040ez online form   For the purpose of determining if this rule applies, do not count the following. 1040ez online form Bulk sales (sales in very large quantities) of oil or natural gas to commercial or industrial users. 1040ez online form Bulk sales of aviation fuels to the Department of Defense. 1040ez online form Sales of oil or natural gas or their by-products outside the United States if none of your domestic production or that of a related person is exported during the tax year or the prior tax year. 1040ez online form Related person. 1040ez online form   To determine if you and another person are related persons, see Related person under Refiners who cannot claim percentage depletion, earlier. 1040ez online form Sales through a related person. 1040ez online form   You are considered to be selling through a related person if any sale by the related person produces gross income from which you may benefit because of your direct or indirect ownership interest in the person. 1040ez online form   You are not considered to be selling through a related person who is a retailer if all the following apply. 1040ez online form You do not have a significant ownership interest in the retailer. 1040ez online form You sell your production to persons who are not related to either you or the retailer. 1040ez online form The retailer does not buy oil or natural gas from your customers or persons related to your customers. 1040ez online form There are no arrangements for the retailer to acquire oil or natural gas you produced for resale or made available for purchase by the retailer. 1040ez online form Neither you nor the retailer knows of or controls the final disposition of the oil or natural gas you sold or the original source of the petroleum products the retailer acquired for resale. 1040ez online form Transferees who cannot claim percentage depletion. 1040ez online form   You cannot claim percentage depletion if you received your interest in a proven oil or gas property by transfer after 1974 and before October 12, 1990. 1040ez online form For a definition of the term “transfer,” see section 1. 1040ez online form 613A-7(n) of the regulations. 1040ez online form For a definition of the term “interest in proven oil or gas property,” see section 1. 1040ez online form 613A-7(p) of the regulations. 1040ez online form Figuring percentage depletion. 1040ez online form   Generally, as an independent producer or royalty owner, you figure your percentage depletion by computing your average daily production of domestic oil or gas and comparing it to your depletable oil or gas quantity. 1040ez online form If your average daily production does not exceed your depletable oil or gas quantity, you figure your percentage depletion by multiplying the gross income from the oil or gas property (defined later) by 15%. 1040ez online form If your average daily production of domestic oil or gas exceeds your depletable oil or gas quantity, you must make an allocation as explained later under Average daily production. 1040ez online form   In addition, there is a limit on the percentage depletion deduction. 1040ez online form See Taxable income limit , later. 1040ez online form Average daily production. 1040ez online form   Figure your average daily production by dividing your total domestic production of oil or gas for the tax year by the number of days in your tax year. 1040ez online form Partial interest. 1040ez online form   If you have a partial interest in the production from a property, figure your share of the production by multiplying total production from the property by your percentage of interest in the revenues from the property. 1040ez online form   You have a partial interest in the production from a property if you have a net profits interest in the property. 1040ez online form To figure the share of production for your net profits interest, you must first determine your percentage participation (as measured by the net profits) in the gross revenue from the property. 1040ez online form To figure this percentage, you divide the income you receive for your net profits interest by the gross revenue from the property. 1040ez online form Then multiply the total production from the property by your percentage participation to figure your share of the production. 1040ez online form Example. 1040ez online form Javier Robles owns oil property in which Pablo Olmos owns a 20% net profits interest. 1040ez online form During the year, the property produced 10,000 barrels of oil, which Javier sold for $200,000. 1040ez online form Javier had expenses of $90,000 attributable to the property. 1040ez online form The property generated a net profit of $110,000 ($200,000 − $90,000). 1040ez online form Pablo received income of $22,000 ($110,000 × . 1040ez online form 20) for his net profits interest. 1040ez online form Pablo determined his percentage participation to be 11% by dividing $22,000 (the income he received) by $200,000 (the gross revenue from the property). 1040ez online form Pablo determined his share of the oil production to be 1,100 barrels (10,000 barrels × 11%). 1040ez online form Depletable oil or natural gas quantity. 1040ez online form   Generally, your depletable oil quantity is 1,000 barrels. 1040ez online form Your depletable natural gas quantity is 6,000 cubic feet multiplied by the number of barrels of your depletable oil quantity that you choose to apply. 1040ez online form If you claim depletion on both oil and natural gas, you must reduce your depletable oil quantity (1,000 barrels) by the number of barrels you use to figure your depletable natural gas quantity. 1040ez online form Example. 1040ez online form You have both oil and natural gas production. 1040ez online form To figure your depletable natural gas quantity, you choose to apply 360 barrels of your 1000-barrel depletable oil quantity. 1040ez online form Your depletable natural gas quantity is 2. 1040ez online form 16 million cubic feet of gas (360 × 6000). 1040ez online form You must reduce your depletable oil quantity to 640 barrels (1000 − 360). 1040ez online form If you have production from marginal wells, see section 613A(c)(6) of the Internal Revenue Code to figure your depletable oil or natural gas quantity. 1040ez online form Also, see Notice 2012-50, available at www. 1040ez online form irs. 1040ez online form gov/irb/2012–31_IRB/index. 1040ez online form html. 1040ez online form Business entities and family members. 1040ez online form   You must allocate the depletable oil or gas quantity among the following related persons in proportion to each entity's or family member's production of domestic oil or gas for the year. 1040ez online form Corporations, trusts, and estates if 50% or more of the beneficial interest is owned by the same or related persons (considering only persons that own at least 5% of the beneficial interest). 1040ez online form You and your spouse and minor children. 1040ez online form A related person is anyone mentioned in the related persons discussion under Nondeductible loss in chapter 2 of Publication 544, except that for purposes of this allocation, item (1) in that discussion includes only an individual, his or her spouse, and minor children. 1040ez online form Controlled group of corporations. 1040ez online form   Members of the same controlled group of corporations are treated as one taxpayer when figuring the depletable oil or natural gas quantity. 1040ez online form They share the depletable quantity. 1040ez online form A controlled group of corporations is defined in section 1563(a) of the Internal Revenue Code, except that, for this purpose, the stock ownership requirement in that definition is “more than 50%” rather than “at least 80%. 1040ez online form ” Gross income from the property. 1040ez online form   For purposes of percentage depletion, gross income from the property (in the case of oil and gas wells) is the amount you receive from the sale of the oil or gas in the immediate vicinity of the well. 1040ez online form If you do not sell the oil or gas on the property, but manufacture or convert it into a refined product before sale or transport it before sale, the gross income from the property is the representative market or field price (RMFP) of the oil or gas, before conversion or transportation. 1040ez online form   If you sold gas after you removed it from the premises for a price that is lower than the RMFP, determine gross income from the property for percentage depletion purposes without regard to the RMFP. 1040ez online form   Gross income from the property does not include lease bonuses, advance royalties, or other amounts payable without regard to production from the property. 1040ez online form Average daily production exceeds depletable quantities. 1040ez online form   If your average daily production for the year is more than your depletable oil or natural gas quantity, figure your allowance for depletion for each domestic oil or natural gas property as follows. 1040ez online form Figure your average daily production of oil or natural gas for the year. 1040ez online form Figure your depletable oil or natural gas quantity for the year. 1040ez online form Figure depletion for all oil or natural gas produced from the property using a percentage depletion rate of 15%. 1040ez online form Multiply the result figured in (3) by a fraction, the numerator of which is the result figured in (2) and the denominator of which is the result figured in (1). 1040ez online form This is your depletion allowance for that property for the year. 1040ez online form Taxable income limit. 1040ez online form   If you are an independent producer or royalty owner of oil and gas, your deduction for percentage depletion is limited to the smaller of the following. 1040ez online form 100% of your taxable income from the property figured without the deduction for depletion and the deduction for domestic production activities under section 199 of the Internal Revenue Code. 1040ez online form For a definition of taxable income from the property, see Taxable income limit , earlier, under Mineral Property. 1040ez online form 65% of your taxable income from all sources, figured without the depletion allowance, the deduction for domestic production activities, any net operating loss carryback, and any capital loss carryback. 1040ez online form You can carry over to the following year any amount you cannot deduct because of the 65%-of-taxable-income limit. 1040ez online form Add it to your depletion allowance (before applying any limits) for the following year. 1040ez online form Partnerships and S Corporations Generally, each partner or S corporation shareholder, and not the partnership or S corporation, figures the depletion allowance separately. 1040ez online form (However, see Electing large partnerships must figure depletion allowance , later. 1040ez online form ) Each partner or shareholder must decide whether to use cost or percentage depletion. 1040ez online form If a partner or shareholder uses percentage depletion, he or she must apply the 65%-of-taxable-income limit using his or her taxable income from all sources. 1040ez online form Partner's or shareholder's adjusted basis. 1040ez online form   The partnership or S corporation must allocate to each partner or shareholder his or her share of the adjusted basis of each oil or gas property held by the partnership or S corporation. 1040ez online form The partnership or S corporation makes the allocation as of the date it acquires the oil or gas property. 1040ez online form   Each partner's share of the adjusted basis of the oil or gas property generally is figured according to that partner's interest in partnership capital. 1040ez online form However, in some cases, it is figured according to the partner's interest in partnership income. 1040ez online form   The partnership or S corporation adjusts the partner's or shareholder's share of the adjusted basis of the oil and gas property for any capital expenditures made for the property and for any change in partnership or S corporation interests. 1040ez online form Recordkeeping. 1040ez online form Each partner or shareholder must separately keep records of his or her share of the adjusted basis in each oil and gas property of the partnership or S corporation. 1040ez online form The partner or shareholder must reduce his or her adjusted basis by the depletion allowed or allowable on the property each year. 1040ez online form The partner or shareholder must use that reduced adjusted basis to figure cost depletion or his or her gain or loss if the partnership or S corporation disposes of the property. 1040ez online form Reporting the deduction. 1040ez online form   Information that you, as a partner or shareholder, use to figure your depletion deduction on oil and gas properties is reported by the partnership or S corporation on Schedule K-1 (Form 1065) or on Schedule K-1 (Form 1120S). 1040ez online form Deduct oil and gas depletion for your partnership or S corporation interest on Schedule E (Form 1040). 1040ez online form The depletion deducted on Schedule E is included in figuring income or loss from rental real estate or royalty properties. 1040ez online form The instructions for Schedule E explain where to report this income or loss and whether you need to file either of the following forms. 1040ez online form Form 6198, At-Risk Limitations. 1040ez online form Form 8582, Passive Activity Loss Limitations. 1040ez online form Electing large partnerships must figure depletion allowance. 1040ez online form   An electing large partnership, rather than each partner, generally must figure the depletion allowance. 1040ez online form The partnership figures the depletion allowance without taking into account the 65-percent-of-taxable-income limit and the depletable oil or natural gas quantity. 1040ez online form Also, the adjusted basis of a partner's interest in the partnership is not affected by the depletion allowance. 1040ez online form   An electing large partnership is one that meets both the following requirements. 1040ez online form The partnership had 100 or more partners in the preceding year. 1040ez online form The partnership chooses to be an electing large partnership. 1040ez online form Disqualified persons. 1040ez online form   An electing large partnership does not figure the depletion allowance of its partners that are disqualified persons. 1040ez online form Disqualified persons must figure it themselves, as explained earlier. 1040ez online form   All the following are disqualified persons. 1040ez online form Refiners who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). 1040ez online form Retailers who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). 1040ez online form Any partner whose average daily production of domestic crude oil and natural gas is more than 500 barrels during the tax year in which the partnership tax year ends. 1040ez online form Average daily production is discussed earlier. 1040ez online form Natural Gas Wells You can use percentage depletion for a well that produces natural gas that is either Sold under a fixed contract, or Produced from geopressured brine. 1040ez online form Natural gas sold under a fixed contract. 1040ez online form   Natural gas sold under a fixed contract qualifies for a percentage depletion rate of 22%. 1040ez online form This is domestic natural gas sold by the producer under a contract that does not provide for a price increase to reflect any increase in the seller's tax liability because of the repeal of percentage depletion for gas. 1040ez online form The contract must have been in effect from February 1, 1975, until the date of sale of the gas. 1040ez online form Price increases after February 1, 1975, are presumed to take the increase in tax liability into account unless demonstrated otherwise by clear and convincing evidence. 1040ez online form Natural gas from geopressured brine. 1040ez online form   Qualified natural gas from geopressured brine is eligible for a percentage depletion rate of 10%. 1040ez online form This is natural gas that is both the following. 1040ez online form Produced from a well you began to drill after September 1978 and before 1984. 1040ez online form Determined in accordance with section 503 of the Natural Gas Policy Act of 1978 to be produced from geopressured brine. 1040ez online form Mines and Geothermal Deposits Certain mines, wells, and other natural deposits, including geothermal deposits, qualify for percentage depletion. 1040ez online form Mines and other natural deposits. 1040ez online form   For a natural deposit, the percentage of your gross income from the property that you can deduct as depletion depends on the type of deposit. 1040ez online form   The following is a list of the percentage depletion rates for the more common minerals. 1040ez online form DEPOSITS RATE Sulphur, uranium, and, if from deposits in the United States, asbestos, lead ore, zinc ore, nickel ore, and mica 22% Gold, silver, copper, iron ore, and certain oil shale, if from deposits in the United States 15% Borax, granite, limestone, marble, mollusk shells, potash, slate, soapstone, and carbon dioxide produced from a well 14% Coal, lignite, and sodium chloride 10% Clay and shale used or sold for use in making sewer pipe or bricks or used or sold for use as sintered or burned lightweight aggregates 7½% Clay used or sold for use in making drainage and roofing tile, flower pots, and kindred products, and gravel, sand, and stone (other than stone used or sold for use by a mine owner or operator as dimension or ornamental stone) 5%   You can find a complete list of minerals and their percentage depletion rates in section 613(b) of the Internal Revenue Code. 1040ez online form Corporate deduction for iron ore and coal. 1040ez online form   The percentage depletion deduction of a corporation for iron ore and coal (including lignite) is reduced by 20% of: The percentage depletion deduction for the tax year (figured without this reduction), minus The adjusted basis of the property at the close of the tax year (figured without the depletion deduction for the tax year). 1040ez online form Gross income from the property. 1040ez online form   For property other than a geothermal deposit or an oil or gas well, gross income from the property means the gross income from mining. 1040ez online form Mining includes all the following. 1040ez online form Extracting ores or minerals from the ground. 1040ez online form Applying certain treatment processes described later. 1040ez online form Transporting ores or minerals (generally, not more than 50 miles) from the point of extraction to the plants or mills in which the treatment processes are applied. 1040ez online form Excise tax. 1040ez online form   Gross income from mining includes the separately stated excise tax received by a mine operator from the sale of coal to compensate the operator for the excise tax the mine operator must pay to finance black lung benefits. 1040ez online form Extraction. 1040ez online form   Extracting ores or minerals from the ground includes extraction by mine owners or operators of ores or minerals from the waste or residue of prior mining. 1040ez online form This does not apply to extraction from waste or residue of prior mining by the purchaser of the waste or residue or the purchaser of the rights to extract ores or minerals from the waste or residue. 1040ez online form Treatment processes. 1040ez online form   The processes included as mining depend on the ore or mineral mined. 1040ez online form To qualify as mining, the treatment processes must be applied by the mine owner or operator. 1040ez online form For a listing of treatment processes considered as mining, see section 613(c)(4) of the Internal Revenue Code and the related regulations. 1040ez online form Transportation of more than 50 miles. 1040ez online form   If the IRS finds that the ore or mineral must be transported more than 50 miles to plants or mills to be treated because of physical and other requirements, the additional authorized transportation is considered mining and included in the computation of gross income from mining. 1040ez online form    If you wish to include transportation of more than 50 miles in the computation of gross income from mining, request an advance ruling from the IRS. 1040ez online form Include in the request the facts about the physical and other requirements that prevented the construction and operation of the plant within 50 miles of the point of extraction. 1040ez online form For more information about requesting an advance ruling, see Revenue Procedure 2013-1, available at www. 1040ez online form irs. 1040ez online form gov/irb/2013-01_IRB/ar11. 1040ez online form html. 1040ez online form Disposal of coal or iron ore. 1040ez online form   You cannot take a depletion deduction for coal (including lignite) or iron ore mined in the United States if both the following apply. 1040ez online form You disposed of it after holding it for more than 1 year. 1040ez online form You disposed of it under a contract under which you retain an economic interest in the coal or iron ore. 1040ez online form Treat any gain on the disposition as a capital gain. 1040ez online form Disposal to related person. 1040ez online form   This rule does not apply if you dispose of the coal or iron ore to one of the following persons. 1040ez online form A related person (as listed in chapter 2 of Publication 544). 1040ez online form A person owned or controlled by the same interests that own or control you. 1040ez online form Geothermal deposits. 1040ez online form   Geothermal deposits located in the United States or its possessions qualify for a percentage depletion rate of 15%. 1040ez online form A geothermal deposit is a geothermal reservoir of natural heat stored in rocks or in a watery liquid or vapor. 1040ez online form For percentage depletion purposes, a geothermal deposit is not considered a gas well. 1040ez online form   Figure gross income from the property for a geothermal steam well in the same way as for oil and gas wells. 1040ez online form See Gross income from the property , earlier, under Oil and Gas Wells. 1040ez online form Percentage depletion on a geothermal deposit cannot be more than 50% of your taxable income from the property. 1040ez online form Lessor's Gross Income In the case of leased property, the depletion deduction is divided between the lessor and the lessee. 1040ez online form A lessor's gross income from the property that qualifies for percentage depletion usually is the total of the royalties received from the lease. 1040ez online form Bonuses and advanced royalties. 1040ez online form   Bonuses and advanced royalties are payments a lessee makes before production to a lessor for the grant of rights in a lease or for minerals, gas, or oil to be extracted from leased property. 1040ez online form If you are the lessor, your income from bonuses and advanced royalties received is subject to an allowance for depletion, as explained in the next two paragraphs. 1040ez online form Figuring cost depletion. 1040ez online form   To figure cost depletion on a bonus, multiply your adjusted basis in the property by a fraction, the numerator of which is the bonus and the denominator of which is the total bonus and royalties expected to be received. 1040ez online form To figure cost depletion on advanced royalties, use the computation explained earlier under Cost Depletion , treating the number of units for which the advanced royalty is received as the number of units sold. 1040ez online form Figuring percentage depletion. 1040ez online form   In the case of mines, wells, and other natural deposits other than gas, oil, or geothermal property, you may use the percentage rates discussed earlier under Mines and Geothermal Deposits . 1040ez online form Any bonus or advanced royalty payments are generally part of the gross income from the property to which the rates are applied in making the calculation. 1040ez online form However, for oil, gas, or geothermal property, gross income does not include lease bonuses, advanced royalties, or other amounts payable without regard to production from the property. 1040ez online form Ending the lease. 1040ez online form   If you receive a bonus on a lease that ends or is abandoned before you derive any income from mineral extraction, include in income the depletion deduction you took. 1040ez online form Do this for the year the lease ends or is abandoned. 1040ez online form Also increase your adjusted basis in the property to restore the depletion deduction you previously subtracted. 1040ez online form   For advanced royalties, include in income the depletion claimed on minerals for which the advanced royalties were paid if the minerals were not produced before the lease ended. 1040ez online form Include this amount in income for the year the lease ends. 1040ez online form Increase your adjusted basis in the property by the amount you include in income. 1040ez online form Delay rentals. 1040ez online form   These are payments for deferring development of the property. 1040ez online form Since delay rentals are ordinary rent, they are ordinary income that is not subject to depletion. 1040ez online form These rentals can be avoided by either abandoning the lease, beginning development operations, or obtaining production. 1040ez online form Timber You can figure timber depletion only by the cost method. 1040ez online form Percentage depletion does not apply to timber. 1040ez online form Base your depletion on your cost or other basis in the timber. 1040ez online form Your cost does not include the cost of land or any amounts recoverable through depreciation. 1040ez online form Depletion takes place when you cut standing timber. 1040ez online form You can figure your depletion deduction when the quantity of cut timber is first accurately measured in the process of exploitation. 1040ez online form Figuring cost depletion. 1040ez online form   To figure your cost depletion allowance, you multiply the number of timber units cut by your depletion unit. 1040ez online form Timber units. 1040ez online form   When you acquire timber property, you must make an estimate of the quantity of marketable timber that exists on the property. 1040ez online form You measure the timber using board feet, log scale, cords, or other units. 1040ez online form If you later determine that you have more or less units of timber, you must adjust the original estimate. 1040ez online form   The term “timber property” means your economic interest in standing timber in each tract or block representing a separate timber account. 1040ez online form Depletion unit. 1040ez online form   You figure your depletion unit each year by taking the following steps. 1040ez online form Determine your cost or adjusted basis of the timber on hand at the beginning of the year. 1040ez online form Adjusted basis is defined under Cost Depletion in the discussion on Mineral Property. 1040ez online form Add to the amount determined in (1) the cost of any timber units acquired during the year and any additions to capital. 1040ez online form Figure the number of timber units to take into account by adding the number of timber units acquired during the year to the number of timber units on hand in the account at the beginning of the year and then adding (or subtracting) any correction to the estimate of the number of timber units remaining in the account. 1040ez online form Divide the result of (2) by the result of (3). 1040ez online form This is your depletion unit. 1040ez online form Example. 1040ez online form You bought a timber tract for $160,000 and the land was worth as much as the timber. 1040ez online form Your basis for the timber is $80,000. 1040ez online form Based on an estimated one million board feet (1,000 MBF) of standing timber, you figure your depletion unit to be $80 per MBF ($80,000 ÷ 1,000). 1040ez online form If you cut 500 MBF of timber, your depletion allowance would be $40,000 (500 MBF × $80). 1040ez online form When to claim depletion. 1040ez online form   Claim your depletion allowance as a deduction in the year of sale or other disposition of the products cut from the timber, unless you choose to treat the cutting of timber as a sale or exchange (explained below). 1040ez online form Include allowable depletion for timber products not sold during the tax year the timber is cut as a cost item in the closing inventory of timber products for the year. 1040ez online form The inventory is your basis for determining gain or loss in the tax year you sell the timber products. 1040ez online form Example. 1040ez online form The facts are the same as in the previous example except that you sold only half of the timber products in the cutting year. 1040ez online form You would deduct $20,000 of the $40,000 depletion that year. 1040ez online form You would add the remaining $20,000 depletion to your closing inventory of timber products. 1040ez online form Electing to treat the cutting of timber as a sale or exchange. 1040ez online form   You can elect, under certain circumstances, to treat the cutting of timber held for more than 1 year as a sale or exchange. 1040ez online form You must make the election on your income tax return for the tax year to which it applies. 1040ez online form If you make this election, subtract the adjusted basis for depletion from the fair market value of the timber on the first day of the tax year in which you cut it to figure the gain or loss on the cutting. 1040ez online form You generally report the gain as long-term capital gain. 1040ez online form The fair market value then becomes your basis for figuring your ordinary gain or loss on the sale or other disposition of the products cut from the timber. 1040ez online form For more information, see Timber in chapter 2 of Publication 544, Sales and Other Dispositions of Assets. 1040ez online form   You may revoke an election to treat the cutting of timber as a sale or exchange without IRS's consent. 1040ez online form The prior election (and revocation) is disregarded for purposes of making a subsequent election. 1040ez online form See Form T (Timber), Forest Activities Schedule, for more information. 1040ez online form Form T. 1040ez online form   Complete and attach Form T (Timber) to your income tax return if you claim a deduction for timber depletion, choose to treat the cutting of timber as a sale or exchange, or make an outright sale of timber. 1040ez online form Prev  Up  Next   Home   More Online Publications