Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Turbotax 2012 Tax Return

Free Income Tax Help2012 Tax Return Filing2011 Irs Form 1040ez10 Ez Form1040x Amended ReturnHow To File An Amended Tax Return For 20122007 Tax FormsH & R Block OnlineFree State Tax Only E Filing2010 Form 1040xFree State E File Tax ReturnFree Irs Tax Forms 2012Filing A Amended Tax Return Form 1040xFiling Taxes For 2013Irs GovFree Tax Amended ReturnE File State Tax Only For FreeTax Filing Sites Federal California State Tax ReturnsIrs RefundH & R Block Free Taxes1040ez 2011Free File 1040ezBest Online Tax Software For MilitaryH&r Block Free ReturnWhere Can I Get A 2012 Tax FormE File State Taxes OnlyTax Return 2011 DeadlineMilitary TaxIrs Tax Form 1040ezFile Previous Years Tax ReturnsFiling Taxes LateIrs Gov Form 1040ezTax Planning Us 1040ezFree E File State Tax ReturnFederal Tax Forms 2012Irs Gov Freefile State Taxes1040ez OnlineFile Late Taxes FreeFree Irs Tax Forms 20111040

Turbotax 2012 Tax Return

Turbotax 2012 tax return 9. Turbotax 2012 tax return   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. Turbotax 2012 tax return Depletion unit. Turbotax 2012 tax return Introduction Depletion is the using up of natural resources by mining, drilling, quarrying stone, or cutting timber. Turbotax 2012 tax return The depletion deduction allows an owner or operator to account for the reduction of a product's reserves. Turbotax 2012 tax return There are two ways of figuring depletion: cost depletion and percentage depletion. Turbotax 2012 tax return For mineral property, you generally must use the method that gives you the larger deduction. Turbotax 2012 tax return For standing timber, you must use cost depletion. Turbotax 2012 tax return 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. Turbotax 2012 tax return More than one person can have an economic interest in the same mineral deposit or timber. Turbotax 2012 tax return In the case of leased property, the depletion deduction is divided between the lessor and the lessee. Turbotax 2012 tax return You have an economic interest if both the following apply. Turbotax 2012 tax return You have acquired by investment any interest in mineral deposits or standing timber. Turbotax 2012 tax return 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. Turbotax 2012 tax return 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. Turbotax 2012 tax return A production payment carved out of, or retained on the sale of, mineral property is not an economic interest. Turbotax 2012 tax return Individuals, corporations, estates, and trusts who claim depletion deductions may be liable for alternative minimum tax. Turbotax 2012 tax return Basis adjustment for depletion. Turbotax 2012 tax return   You must reduce the basis of your property by the depletion allowed or allowable, whichever is greater. Turbotax 2012 tax return Mineral Property Mineral property includes oil and gas wells, mines, and other natural deposits (including geothermal deposits). Turbotax 2012 tax return For this purpose, the term “property” means each separate interest you own in each mineral deposit in each separate tract or parcel of land. Turbotax 2012 tax return You can treat two or more separate interests as one property or as separate properties. Turbotax 2012 tax return See section 614 of the Internal Revenue Code and the related regulations for rules on how to treat separate mineral interests. Turbotax 2012 tax return There are two ways of figuring depletion on mineral property. Turbotax 2012 tax return Cost depletion. Turbotax 2012 tax return Percentage depletion. Turbotax 2012 tax return Generally, you must use the method that gives you the larger deduction. Turbotax 2012 tax return However, unless you are an independent producer or royalty owner, you generally cannot use percentage depletion for oil and gas wells. Turbotax 2012 tax return See Oil and Gas Wells , later. Turbotax 2012 tax return Cost Depletion To figure cost depletion you must first determine the following. Turbotax 2012 tax return The property's basis for depletion. Turbotax 2012 tax return The total recoverable units of mineral in the property's natural deposit. Turbotax 2012 tax return The number of units of mineral sold during the tax year. Turbotax 2012 tax return Basis for depletion. Turbotax 2012 tax return   To figure the property's basis for depletion, subtract all the following from the property's adjusted basis. Turbotax 2012 tax return Amounts recoverable through: Depreciation deductions, Deferred expenses (including deferred exploration and development costs), and Deductions other than depletion. Turbotax 2012 tax return The residual value of land and improvements at the end of operations. Turbotax 2012 tax return The cost or value of land acquired for purposes other than mineral production. Turbotax 2012 tax return Adjusted basis. Turbotax 2012 tax return   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. Turbotax 2012 tax return Your adjusted basis can never be less than zero. Turbotax 2012 tax return See Publication 551, Basis of Assets, for more information on adjusted basis. Turbotax 2012 tax return Total recoverable units. Turbotax 2012 tax return   The total recoverable units is the sum of the following. Turbotax 2012 tax return The number of units of mineral remaining at the end of the year (including units recovered but not sold). Turbotax 2012 tax return The number of units of mineral sold during the tax year (determined under your method of accounting, as explained next). Turbotax 2012 tax return   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. Turbotax 2012 tax return You must include ores and minerals that are developed, in sight, blocked out, or assured. Turbotax 2012 tax return You must also include probable or prospective ores or minerals that are believed to exist based on good evidence. Turbotax 2012 tax return But see Elective safe harbor for owners of oil and gas property , later. Turbotax 2012 tax return Number of units sold. Turbotax 2012 tax return   You determine the number of units sold during the tax year based on your method of accounting. Turbotax 2012 tax return Use the following table to make this determination. Turbotax 2012 tax return    IF you  use . Turbotax 2012 tax return . Turbotax 2012 tax return . Turbotax 2012 tax return THEN the units sold during the year are . Turbotax 2012 tax return . Turbotax 2012 tax return . Turbotax 2012 tax return The cash method of accounting The units sold for which you receive payment during the tax year (regardless of the year of sale). Turbotax 2012 tax return An accrual method of accounting The units sold based on your inventories and method of accounting for inventory. Turbotax 2012 tax return   The number of units sold during the tax year does not include any for which depletion deductions were allowed or allowable in earlier years. Turbotax 2012 tax return Figuring the cost depletion deduction. Turbotax 2012 tax return   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. Turbotax 2012 tax return Step Action Result 1 Divide your property's basis for depletion by total recoverable units. Turbotax 2012 tax return Rate per unit. Turbotax 2012 tax return 2 Multiply the rate per unit by units sold during the tax year. Turbotax 2012 tax return Cost depletion deduction. Turbotax 2012 tax return You must keep accounts for the depletion of each property and adjust these accounts each year for units sold and depletion claimed. Turbotax 2012 tax return Elective safe harbor for owners of oil and gas property. Turbotax 2012 tax return   Instead of using the method described earlier to determine the total recoverable units, you can use an elective safe harbor. Turbotax 2012 tax return If you choose the elective safe harbor, the total recoverable units equal 105% of a property's proven reserves (both developed and undeveloped). Turbotax 2012 tax return For details, see Revenue Procedure 2004-19 on page 563 of Internal Revenue Bulletin 2004-10, available at www. Turbotax 2012 tax return irs. Turbotax 2012 tax return gov/pub/irs-irbs/irb04-10. Turbotax 2012 tax return pdf. Turbotax 2012 tax return   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. Turbotax 2012 tax return The statement must indicate that you are electing the safe harbor provided by Revenue Procedure 2004-19. Turbotax 2012 tax return The election, if made, is effective for the tax year in which it is made and all later years. Turbotax 2012 tax return It cannot be revoked for the tax year in which it is elected, but may be revoked in a later year. Turbotax 2012 tax return Once revoked, it cannot be re-elected for the next 5 years. Turbotax 2012 tax return 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. Turbotax 2012 tax return 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 . Turbotax 2012 tax return Rates and other rules for percentage depletion of other specific minerals are found later in Mines and Geothermal Deposits . Turbotax 2012 tax return Gross income. Turbotax 2012 tax return   When figuring percentage depletion, subtract from your gross income from the property the following amounts. Turbotax 2012 tax return Any rents or royalties you paid or incurred for the property. Turbotax 2012 tax return 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. Turbotax 2012 tax return A bonus payment includes amounts you paid as a lessee to satisfy a production payment retained by the lessor. Turbotax 2012 tax return   Use the following fraction to figure the part of the bonus you must subtract. Turbotax 2012 tax return No. Turbotax 2012 tax return 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. Turbotax 2012 tax return For other property, more information about the definition of gross income from the property is under Mines and Geothermal Deposits , later. Turbotax 2012 tax return Taxable income limit. Turbotax 2012 tax return   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. Turbotax 2012 tax return   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. Turbotax 2012 tax return These deductible items include, but are not limited to, the following. Turbotax 2012 tax return Operating expenses. Turbotax 2012 tax return Certain selling expenses. Turbotax 2012 tax return Administrative and financial overhead. Turbotax 2012 tax return Depreciation. Turbotax 2012 tax return Intangible drilling and development costs. Turbotax 2012 tax return Exploration and development expenditures. Turbotax 2012 tax return Deductible taxes (see chapter 5), but not taxes that you capitalize or take as a credit. Turbotax 2012 tax return Losses sustained. Turbotax 2012 tax return   The following rules apply when figuring your taxable income from the property for purposes of the taxable income limit. Turbotax 2012 tax return Do not deduct any net operating loss deduction from the gross income from the property. Turbotax 2012 tax return Corporations do not deduct charitable contributions from the gross income from the property. Turbotax 2012 tax return 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. Turbotax 2012 tax return See section 1. Turbotax 2012 tax return 613-5(b)(1) of the regulations for information on how to figure the ordinary gain allocable to the property. Turbotax 2012 tax return Oil and Gas Wells You cannot claim percentage depletion for an oil or gas well unless at least one of the following applies. Turbotax 2012 tax return You are either an independent producer or a royalty owner. Turbotax 2012 tax return The well produces natural gas that is either sold under a fixed contract or produced from geopressured brine. Turbotax 2012 tax return If you are an independent producer or royalty owner, see Independent Producers and Royalty Owners , next. Turbotax 2012 tax return 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. Turbotax 2012 tax return 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. Turbotax 2012 tax return However, certain refiners, as explained next, and certain retailers and transferees of proven oil and gas properties, as explained next, cannot claim percentage depletion. Turbotax 2012 tax return For information on figuring the deduction, see Figuring percentage depletion , later. Turbotax 2012 tax return Refiners who cannot claim percentage depletion. Turbotax 2012 tax return   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. Turbotax 2012 tax return 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. Turbotax 2012 tax return Related person. Turbotax 2012 tax return   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. Turbotax 2012 tax return For example, a corporation, partnership, estate, or trust and anyone who holds a significant ownership interest in it are related persons. Turbotax 2012 tax return A partnership and a trust are related persons if one person holds a significant ownership interest in each of them. Turbotax 2012 tax return 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. Turbotax 2012 tax return The value of the outstanding stock of a corporation. Turbotax 2012 tax return The interest in the profits or capital of a partnership. Turbotax 2012 tax return The beneficial interests in an estate or trust. Turbotax 2012 tax return 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. Turbotax 2012 tax return Retailers who cannot claim percentage depletion. Turbotax 2012 tax return   You cannot claim percentage depletion if both the following apply. Turbotax 2012 tax return You sell oil or natural gas or their by-products directly or through a related person in any of the following situations. Turbotax 2012 tax return Through a retail outlet operated by you or a related person. Turbotax 2012 tax return 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. Turbotax 2012 tax return 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. Turbotax 2012 tax return 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. Turbotax 2012 tax return   For the purpose of determining if this rule applies, do not count the following. Turbotax 2012 tax return Bulk sales (sales in very large quantities) of oil or natural gas to commercial or industrial users. Turbotax 2012 tax return Bulk sales of aviation fuels to the Department of Defense. Turbotax 2012 tax return 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. Turbotax 2012 tax return Related person. Turbotax 2012 tax return   To determine if you and another person are related persons, see Related person under Refiners who cannot claim percentage depletion, earlier. Turbotax 2012 tax return Sales through a related person. Turbotax 2012 tax return   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. Turbotax 2012 tax return   You are not considered to be selling through a related person who is a retailer if all the following apply. Turbotax 2012 tax return You do not have a significant ownership interest in the retailer. Turbotax 2012 tax return You sell your production to persons who are not related to either you or the retailer. Turbotax 2012 tax return The retailer does not buy oil or natural gas from your customers or persons related to your customers. Turbotax 2012 tax return 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. Turbotax 2012 tax return 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. Turbotax 2012 tax return Transferees who cannot claim percentage depletion. Turbotax 2012 tax return   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. Turbotax 2012 tax return For a definition of the term “transfer,” see section 1. Turbotax 2012 tax return 613A-7(n) of the regulations. Turbotax 2012 tax return For a definition of the term “interest in proven oil or gas property,” see section 1. Turbotax 2012 tax return 613A-7(p) of the regulations. Turbotax 2012 tax return Figuring percentage depletion. Turbotax 2012 tax return   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. Turbotax 2012 tax return 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%. Turbotax 2012 tax return 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. Turbotax 2012 tax return   In addition, there is a limit on the percentage depletion deduction. Turbotax 2012 tax return See Taxable income limit , later. Turbotax 2012 tax return Average daily production. Turbotax 2012 tax return   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. Turbotax 2012 tax return Partial interest. Turbotax 2012 tax return   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. Turbotax 2012 tax return   You have a partial interest in the production from a property if you have a net profits interest in the property. Turbotax 2012 tax return 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. Turbotax 2012 tax return To figure this percentage, you divide the income you receive for your net profits interest by the gross revenue from the property. Turbotax 2012 tax return Then multiply the total production from the property by your percentage participation to figure your share of the production. Turbotax 2012 tax return Example. Turbotax 2012 tax return Javier Robles owns oil property in which Pablo Olmos owns a 20% net profits interest. Turbotax 2012 tax return During the year, the property produced 10,000 barrels of oil, which Javier sold for $200,000. Turbotax 2012 tax return Javier had expenses of $90,000 attributable to the property. Turbotax 2012 tax return The property generated a net profit of $110,000 ($200,000 − $90,000). Turbotax 2012 tax return Pablo received income of $22,000 ($110,000 × . Turbotax 2012 tax return 20) for his net profits interest. Turbotax 2012 tax return 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). Turbotax 2012 tax return Pablo determined his share of the oil production to be 1,100 barrels (10,000 barrels × 11%). Turbotax 2012 tax return Depletable oil or natural gas quantity. Turbotax 2012 tax return   Generally, your depletable oil quantity is 1,000 barrels. Turbotax 2012 tax return 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. Turbotax 2012 tax return 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. Turbotax 2012 tax return Example. Turbotax 2012 tax return You have both oil and natural gas production. Turbotax 2012 tax return To figure your depletable natural gas quantity, you choose to apply 360 barrels of your 1000-barrel depletable oil quantity. Turbotax 2012 tax return Your depletable natural gas quantity is 2. Turbotax 2012 tax return 16 million cubic feet of gas (360 × 6000). Turbotax 2012 tax return You must reduce your depletable oil quantity to 640 barrels (1000 − 360). Turbotax 2012 tax return 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. Turbotax 2012 tax return Also, see Notice 2012-50, available at www. Turbotax 2012 tax return irs. Turbotax 2012 tax return gov/irb/2012–31_IRB/index. Turbotax 2012 tax return html. Turbotax 2012 tax return Business entities and family members. Turbotax 2012 tax return   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. Turbotax 2012 tax return 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). Turbotax 2012 tax return You and your spouse and minor children. Turbotax 2012 tax return 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. Turbotax 2012 tax return Controlled group of corporations. Turbotax 2012 tax return   Members of the same controlled group of corporations are treated as one taxpayer when figuring the depletable oil or natural gas quantity. Turbotax 2012 tax return They share the depletable quantity. Turbotax 2012 tax return 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%. Turbotax 2012 tax return ” Gross income from the property. Turbotax 2012 tax return   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. Turbotax 2012 tax return 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. Turbotax 2012 tax return   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. Turbotax 2012 tax return   Gross income from the property does not include lease bonuses, advance royalties, or other amounts payable without regard to production from the property. Turbotax 2012 tax return Average daily production exceeds depletable quantities. Turbotax 2012 tax return   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. Turbotax 2012 tax return Figure your average daily production of oil or natural gas for the year. Turbotax 2012 tax return Figure your depletable oil or natural gas quantity for the year. Turbotax 2012 tax return Figure depletion for all oil or natural gas produced from the property using a percentage depletion rate of 15%. Turbotax 2012 tax return 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). Turbotax 2012 tax return This is your depletion allowance for that property for the year. Turbotax 2012 tax return Taxable income limit. Turbotax 2012 tax return   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. Turbotax 2012 tax return 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. Turbotax 2012 tax return For a definition of taxable income from the property, see Taxable income limit , earlier, under Mineral Property. Turbotax 2012 tax return 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. Turbotax 2012 tax return You can carry over to the following year any amount you cannot deduct because of the 65%-of-taxable-income limit. Turbotax 2012 tax return Add it to your depletion allowance (before applying any limits) for the following year. Turbotax 2012 tax return Partnerships and S Corporations Generally, each partner or S corporation shareholder, and not the partnership or S corporation, figures the depletion allowance separately. Turbotax 2012 tax return (However, see Electing large partnerships must figure depletion allowance , later. Turbotax 2012 tax return ) Each partner or shareholder must decide whether to use cost or percentage depletion. Turbotax 2012 tax return 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. Turbotax 2012 tax return Partner's or shareholder's adjusted basis. Turbotax 2012 tax return   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. Turbotax 2012 tax return The partnership or S corporation makes the allocation as of the date it acquires the oil or gas property. Turbotax 2012 tax return   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. Turbotax 2012 tax return However, in some cases, it is figured according to the partner's interest in partnership income. Turbotax 2012 tax return   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. Turbotax 2012 tax return Recordkeeping. Turbotax 2012 tax return 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. Turbotax 2012 tax return The partner or shareholder must reduce his or her adjusted basis by the depletion allowed or allowable on the property each year. Turbotax 2012 tax return 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. Turbotax 2012 tax return Reporting the deduction. Turbotax 2012 tax return   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). Turbotax 2012 tax return Deduct oil and gas depletion for your partnership or S corporation interest on Schedule E (Form 1040). Turbotax 2012 tax return The depletion deducted on Schedule E is included in figuring income or loss from rental real estate or royalty properties. Turbotax 2012 tax return The instructions for Schedule E explain where to report this income or loss and whether you need to file either of the following forms. Turbotax 2012 tax return Form 6198, At-Risk Limitations. Turbotax 2012 tax return Form 8582, Passive Activity Loss Limitations. Turbotax 2012 tax return Electing large partnerships must figure depletion allowance. Turbotax 2012 tax return   An electing large partnership, rather than each partner, generally must figure the depletion allowance. Turbotax 2012 tax return 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. Turbotax 2012 tax return Also, the adjusted basis of a partner's interest in the partnership is not affected by the depletion allowance. Turbotax 2012 tax return   An electing large partnership is one that meets both the following requirements. Turbotax 2012 tax return The partnership had 100 or more partners in the preceding year. Turbotax 2012 tax return The partnership chooses to be an electing large partnership. Turbotax 2012 tax return Disqualified persons. Turbotax 2012 tax return   An electing large partnership does not figure the depletion allowance of its partners that are disqualified persons. Turbotax 2012 tax return Disqualified persons must figure it themselves, as explained earlier. Turbotax 2012 tax return   All the following are disqualified persons. Turbotax 2012 tax return Refiners who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). Turbotax 2012 tax return Retailers who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). Turbotax 2012 tax return 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. Turbotax 2012 tax return Average daily production is discussed earlier. Turbotax 2012 tax return 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. Turbotax 2012 tax return Natural gas sold under a fixed contract. Turbotax 2012 tax return   Natural gas sold under a fixed contract qualifies for a percentage depletion rate of 22%. Turbotax 2012 tax return 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. Turbotax 2012 tax return The contract must have been in effect from February 1, 1975, until the date of sale of the gas. Turbotax 2012 tax return 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. Turbotax 2012 tax return Natural gas from geopressured brine. Turbotax 2012 tax return   Qualified natural gas from geopressured brine is eligible for a percentage depletion rate of 10%. Turbotax 2012 tax return This is natural gas that is both the following. Turbotax 2012 tax return Produced from a well you began to drill after September 1978 and before 1984. Turbotax 2012 tax return Determined in accordance with section 503 of the Natural Gas Policy Act of 1978 to be produced from geopressured brine. Turbotax 2012 tax return Mines and Geothermal Deposits Certain mines, wells, and other natural deposits, including geothermal deposits, qualify for percentage depletion. Turbotax 2012 tax return Mines and other natural deposits. Turbotax 2012 tax return   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. Turbotax 2012 tax return   The following is a list of the percentage depletion rates for the more common minerals. Turbotax 2012 tax return 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. Turbotax 2012 tax return Corporate deduction for iron ore and coal. Turbotax 2012 tax return   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). Turbotax 2012 tax return Gross income from the property. Turbotax 2012 tax return   For property other than a geothermal deposit or an oil or gas well, gross income from the property means the gross income from mining. Turbotax 2012 tax return Mining includes all the following. Turbotax 2012 tax return Extracting ores or minerals from the ground. Turbotax 2012 tax return Applying certain treatment processes described later. Turbotax 2012 tax return 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. Turbotax 2012 tax return Excise tax. Turbotax 2012 tax return   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. Turbotax 2012 tax return Extraction. Turbotax 2012 tax return   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. Turbotax 2012 tax return 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. Turbotax 2012 tax return Treatment processes. Turbotax 2012 tax return   The processes included as mining depend on the ore or mineral mined. Turbotax 2012 tax return To qualify as mining, the treatment processes must be applied by the mine owner or operator. Turbotax 2012 tax return For a listing of treatment processes considered as mining, see section 613(c)(4) of the Internal Revenue Code and the related regulations. Turbotax 2012 tax return Transportation of more than 50 miles. Turbotax 2012 tax return   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. Turbotax 2012 tax return    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. Turbotax 2012 tax return 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. Turbotax 2012 tax return For more information about requesting an advance ruling, see Revenue Procedure 2013-1, available at www. Turbotax 2012 tax return irs. Turbotax 2012 tax return gov/irb/2013-01_IRB/ar11. Turbotax 2012 tax return html. Turbotax 2012 tax return Disposal of coal or iron ore. Turbotax 2012 tax return   You cannot take a depletion deduction for coal (including lignite) or iron ore mined in the United States if both the following apply. Turbotax 2012 tax return You disposed of it after holding it for more than 1 year. Turbotax 2012 tax return You disposed of it under a contract under which you retain an economic interest in the coal or iron ore. Turbotax 2012 tax return Treat any gain on the disposition as a capital gain. Turbotax 2012 tax return Disposal to related person. Turbotax 2012 tax return   This rule does not apply if you dispose of the coal or iron ore to one of the following persons. Turbotax 2012 tax return A related person (as listed in chapter 2 of Publication 544). Turbotax 2012 tax return A person owned or controlled by the same interests that own or control you. Turbotax 2012 tax return Geothermal deposits. Turbotax 2012 tax return   Geothermal deposits located in the United States or its possessions qualify for a percentage depletion rate of 15%. Turbotax 2012 tax return A geothermal deposit is a geothermal reservoir of natural heat stored in rocks or in a watery liquid or vapor. Turbotax 2012 tax return For percentage depletion purposes, a geothermal deposit is not considered a gas well. Turbotax 2012 tax return   Figure gross income from the property for a geothermal steam well in the same way as for oil and gas wells. Turbotax 2012 tax return See Gross income from the property , earlier, under Oil and Gas Wells. Turbotax 2012 tax return Percentage depletion on a geothermal deposit cannot be more than 50% of your taxable income from the property. Turbotax 2012 tax return Lessor's Gross Income In the case of leased property, the depletion deduction is divided between the lessor and the lessee. Turbotax 2012 tax return A lessor's gross income from the property that qualifies for percentage depletion usually is the total of the royalties received from the lease. Turbotax 2012 tax return Bonuses and advanced royalties. Turbotax 2012 tax return   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. Turbotax 2012 tax return 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. Turbotax 2012 tax return Figuring cost depletion. Turbotax 2012 tax return   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. Turbotax 2012 tax return 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. Turbotax 2012 tax return Figuring percentage depletion. Turbotax 2012 tax return   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 . Turbotax 2012 tax return 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. Turbotax 2012 tax return 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. Turbotax 2012 tax return Ending the lease. Turbotax 2012 tax return   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. Turbotax 2012 tax return Do this for the year the lease ends or is abandoned. Turbotax 2012 tax return Also increase your adjusted basis in the property to restore the depletion deduction you previously subtracted. Turbotax 2012 tax return   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. Turbotax 2012 tax return Include this amount in income for the year the lease ends. Turbotax 2012 tax return Increase your adjusted basis in the property by the amount you include in income. Turbotax 2012 tax return Delay rentals. Turbotax 2012 tax return   These are payments for deferring development of the property. Turbotax 2012 tax return Since delay rentals are ordinary rent, they are ordinary income that is not subject to depletion. Turbotax 2012 tax return These rentals can be avoided by either abandoning the lease, beginning development operations, or obtaining production. Turbotax 2012 tax return Timber You can figure timber depletion only by the cost method. Turbotax 2012 tax return Percentage depletion does not apply to timber. Turbotax 2012 tax return Base your depletion on your cost or other basis in the timber. Turbotax 2012 tax return Your cost does not include the cost of land or any amounts recoverable through depreciation. Turbotax 2012 tax return Depletion takes place when you cut standing timber. Turbotax 2012 tax return You can figure your depletion deduction when the quantity of cut timber is first accurately measured in the process of exploitation. Turbotax 2012 tax return Figuring cost depletion. Turbotax 2012 tax return   To figure your cost depletion allowance, you multiply the number of timber units cut by your depletion unit. Turbotax 2012 tax return Timber units. Turbotax 2012 tax return   When you acquire timber property, you must make an estimate of the quantity of marketable timber that exists on the property. Turbotax 2012 tax return You measure the timber using board feet, log scale, cords, or other units. Turbotax 2012 tax return If you later determine that you have more or less units of timber, you must adjust the original estimate. Turbotax 2012 tax return   The term “timber property” means your economic interest in standing timber in each tract or block representing a separate timber account. Turbotax 2012 tax return Depletion unit. Turbotax 2012 tax return   You figure your depletion unit each year by taking the following steps. Turbotax 2012 tax return Determine your cost or adjusted basis of the timber on hand at the beginning of the year. Turbotax 2012 tax return Adjusted basis is defined under Cost Depletion in the discussion on Mineral Property. Turbotax 2012 tax return Add to the amount determined in (1) the cost of any timber units acquired during the year and any additions to capital. Turbotax 2012 tax return 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. Turbotax 2012 tax return Divide the result of (2) by the result of (3). Turbotax 2012 tax return This is your depletion unit. Turbotax 2012 tax return Example. Turbotax 2012 tax return You bought a timber tract for $160,000 and the land was worth as much as the timber. Turbotax 2012 tax return Your basis for the timber is $80,000. Turbotax 2012 tax return 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). Turbotax 2012 tax return If you cut 500 MBF of timber, your depletion allowance would be $40,000 (500 MBF × $80). Turbotax 2012 tax return When to claim depletion. Turbotax 2012 tax return   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). Turbotax 2012 tax return 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. Turbotax 2012 tax return The inventory is your basis for determining gain or loss in the tax year you sell the timber products. Turbotax 2012 tax return Example. Turbotax 2012 tax return The facts are the same as in the previous example except that you sold only half of the timber products in the cutting year. Turbotax 2012 tax return You would deduct $20,000 of the $40,000 depletion that year. Turbotax 2012 tax return You would add the remaining $20,000 depletion to your closing inventory of timber products. Turbotax 2012 tax return Electing to treat the cutting of timber as a sale or exchange. Turbotax 2012 tax return   You can elect, under certain circumstances, to treat the cutting of timber held for more than 1 year as a sale or exchange. Turbotax 2012 tax return You must make the election on your income tax return for the tax year to which it applies. Turbotax 2012 tax return 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. Turbotax 2012 tax return You generally report the gain as long-term capital gain. Turbotax 2012 tax return 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. Turbotax 2012 tax return For more information, see Timber in chapter 2 of Publication 544, Sales and Other Dispositions of Assets. Turbotax 2012 tax return   You may revoke an election to treat the cutting of timber as a sale or exchange without IRS's consent. Turbotax 2012 tax return The prior election (and revocation) is disregarded for purposes of making a subsequent election. Turbotax 2012 tax return See Form T (Timber), Forest Activities Schedule, for more information. Turbotax 2012 tax return Form T. Turbotax 2012 tax return   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. Turbotax 2012 tax return Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

SOI Tax Stats - Personal Wealth Statistics

Return to the Tax Stats home page

What is the Personal Wealth Study?

The Personal Wealth Study uses information reported on Form 706, United States Estate (and Generation Skipping Transfer) Tax Return, to estimate the wealth of the living population. These estimates, based on the Estate Multiplier technique, appear every three years. The estimates are limited to that segment of the population for whom personal wealth is at least equal to the estate tax filing threshold in effect for the estimation period.

For information about selected terms and concepts and a description of the data sources and limitations, please visit Personal Wealth Study Metadata.

SOI Data Tables SOI Bulletin Articles Research Papers
 
Additional Information

Compendium of Federal 
Estate Tax & Personal 
Wealth Studies: Volume 1
 

Compendium of Federal 
Transfer Tax & Personal 
Wealth Studies: Volume 2

 

SOI Data Tables

Included Items: Total and selected assets, debts and mortgages, and net worth.

All Top Wealthholders by Size of Net Worth

Female Top Wealthholders by Size of Net Worth

Male Top Wealthholders by Size of Net Worth

Female Top Wealthholders by Age

Male Top Wealthholders by Age

Top Wealthholders by State of Residence


SOI Bulletin Articles

The articles below contain detailed analysis, including some year-to-year comparisons, as well as an explanation of estimation methodology and data tables. All of the articles are in .pdf format. These articles were also published in the quarterly SOI Bulletin.

2007      2004      2001     1998     1995     1992      1989      1986

The Underlying Methodology of the Estate Multiplier Technique Recent Improvements for 1989

Preliminary Estimates of Personal Wealth, 1982: Composition of Assets

Estimates of Personal Wealth, 1982: A Second Look

Trends in Personal Wealth, 1976-1981


Research Papers

The following are research papers written by SOI analysts.  The papers below are in .pdf format.

Consider the Source: Differences in Estimates of Income and Wealth From Survey and Tax Data
Author: Barry W. Johnson                 Kevin Moore
Statistics of Income, IRS     Federal Reserve Board of Governors
This paper examines the comparability of administrative and survey data, focusing specifically on data from Federal income and estate tax returns collected by the Statistics of Income (SOI) Division of the U.S. Internal Revenue Service (IRS), and the Survey of Consumer Finances (SCF) sponsored by the Board of Governors of the Federal Reserve System.

 

Updating Techniques for Estimating Wealth from Federal Estate Tax Returns
Author: Barry W. Johnson
Statistics of Income, IRS
This paper documents the history and development of the estate multiplier technique, a statistical methodology for estimating the wealth of a living population using data reported on returns filed for wealthy decedents, with an emphasis on recent methodological improvements.

 


Additional Information

The Federal Reserve Board of Governor's triennial Survey of Consumer Finances, which is supported by the Statistics of Income Division, provides estimates of household finances, including wealth, income, and debts.  Analyses of survey results, as well as public-use data sets, can be accessed online at through the Federal Reserve.
 


File readers

Bulletin articles and research papers are available in Adobe PDF format, which requires the free Adobe Acrobat reader to view and print these files.  Data tables are available in Excel version 4.0.  A free Excel viewer is available for download, if needed.

Return to the Tax Stats home page

Page Last Reviewed or Updated: 31-Jan-2014

The Turbotax 2012 Tax Return

Turbotax 2012 tax return Publication 908 - Additional Material Prev  Up  Next   Home   More Online Publications