Capital Gains and Losses
Capital Gains Tax Questions? Ask a Tax Advisor for Answers ASAP
Hi. My name is ***** ***** I will be happy to help you.
You did not sell the land, you just gave the rights to somebody to get the gas from underneath your land, correct?
Did you received any type of tax form for the 50K? 1099Misc or K1, maybe?
It is technically type of royalty income. You can report it on Schedule E as royalty and deduct depletion, 15% of what you received. Have you signed some type of lease/rent agreement or 50K is just one time payment?
You can still claim the depletion deduction since your property will be used. You do not estimate value of the gas at the time you bought it.
Yes, 42,500 its about right. Just make sure, when you report it to check that it is not subject to self-employment tax.