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I called the IRS and this is what I was told by them.
I have to deduct the "dry hole Expense" on Sch C under other expenses since apparently a 1099 was issued for $120 in nonemployee compensation.
If you disagree, please tell me.
Where would I deduct it on the Sch E?
I am in the business of investing in oil & gas driling ventures. In the past all transactions have been partnerships and I would receive a K-1 and use the Sch E. That is why I am confused about this.
This venture was call a subscription. I just received the 1099 Misc Income with box 7 showing non employee compensation from Grand Southern Resources ( a drilling company). The compensation was for the minute amount of oil & gas collected during the drilling process.
Thank you so much for your time with this matter.