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You should not report your investment on your tax return.
What you need to do - keep all supporting documents - and you will be able to recover your original investment when you will start receiving income.
As long as there is no taxable income - your original investment will be your basis and is not deductible against your other taxable income.
Information that you received is correct - normally - you are filing Schedule C to report income and deductions from an oil or gas well in which you own a working interest directly or through an entity that does not limit your liability, check the "Yes" box on line "G". The activity of owning a working interest is not a passive activity, regardless of your participation.
However - as long as there is no income - that should not be your concern at this time.
Let me know if you need any clarification or other help with tax related issues.
Section 263(a) generally disallows a deduction for capital expenditures. However, § 263(c) provides that, except as provided in § 263(i), under regulations prescribed by the Secretary, a taxpayer may elect to deduct as current expenses intangible drilling and development costs ("IDC") in the case of oil and gas wells.
Treas. Reg. § 1.612-4 implements § 263(c) to permit an "operator" (one who holds a working or operating interest in an oil and gas property) to elect to deduct IDC in the case of oil and gas wells, in lieu of capitalizing such costs. This IDC option applies to all expenditures made by an operator for wages, fuel, repairs, hauling, supplies, etc., incident to and necessary for the drilling of wells and the preparation of wells for the production of oil or gas. IDC includes the cost to operators of any drilling or development work (excluding amounts payable only out of production or gross or net proceeds from production, if such amounts are depletable income to the recipient, and amounts properly allocable to the cost of depreciable property) done for them by contractors under any form of contract, including turnkey contracts.
Please see fro reference - http://edocket.access.gpo.gov/cfr_2009/aprqtr/pdf/26cfr1.612-4.pdf
So - if you holds a working or operating interest in an oil and gas property - you may elect to deduct as current expenses intangible drilling and development costs ("IDC") in the case of oil and gas wells.
Thus if you qualify - report such deduction on schedule C, party V - www.irs.gov/pub/irs-pdf/f1040sc.pdf
In your tax preparation software - you need to add schedule C and choose as not a passive activity.