Sale of Working Intertest in Oil and Gas

[chadjstelly]

I had a small working interest in and Oil and Gas Well for 2 years and I have sold it.  Is this reported on Schedule C and if so is it capable of using the 15% Depletion factor?

[MarilynG1]

If you have been entering income from your Oil and Gas property in the Rentals and Royalty section of TurboTax, you would enter the sale there also. 

This is reported on Schedule E, and you will be asked about the Depletion Factor when you enter the income.  

Type 'royalty income' in the Search area and then 'Jump to royalty income' to get to this section.  

[chadjstelly]

The Income for the Wells have been reported under a schedule C the last couple of years..Its a true working interest .  I have to pay Intangible Drilling Cost Lease Operating Exp.  I sold three of the Wells Working interest this year.  So was wondering is this sale of Working interest be recognized in the Captail Gain/Loss.

[LynnN82]

Sale of working interest in an Oil and Gas lease is a sale of the well equipment, which is personal property, and an interest in the lease which is real property. Sale proceeds should be allocated between the two assets. sale of the lease is reported on Schedule D. Sale of the equipment is reported in Form 4797. You may recognize ordinary income from sale of the equipment, while sale of the real property will produce a capital gain or loss.