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Screen OGWell - Oil / Gas Well Information (1040)

General Information

Enter a unique well description. All reports include the description to help distinguish this well from others entered in the UltraTax CS/Oil & Gas module. This field is mandatory.
Enter the cost center unit number that's associated with this well. The cost center you specify is the source for the overhead allocation for this well when calculating the net income for the well.
Enter a unique well or lease number that's not already in use by another unit of this input screen. The maximum well number is 9999.
Enter the state postal code for the state in which the well is located. If all wells are located in only 1 state, don't enter a state postal code. For those clients with wells in multiple states, the reports generated by the UltraTax CS/Oil & Gas module are categorized by state.
The generated oil / gas well schedule uses this date for reporting purposes.
The intangible drilling costs default to 12-month calculations for production. When production isn't 12 months, enter the appropriate number of months. The amortization rate is the number of production months, divided by 120. The excess IDC preference calculation uses the greater of the amortization rate or the cost depletion rate.
Enter the production type code, or leave the field blank to default to the primary oil / gas production. The production type entered here determines the type of percentage depletion to calculate for each well. The following table shows the available percentage depletion code, description, and depletion rate, and it indicates whether the percentage depletion deduction is limited to 65% of taxable income.
Production code
Depletion description
Subject to rate
65% limit
P
Primary oil / gas (Default)
15%
Yes
F
Fixed contract gas
22%
No
M
Marginal production
15%
Yes
B
Brine production
10%
No
N
No percentage depletion allowed
0%
No
To exclude this well as a dry hole, enter
X
. The excess IDC preference adjustment excludes any IDC expensed. If this checkbox isn't marked, the well won't be excluded even when amounts are present in production income or dry hole costs.

Lease Income and Exceptions

Enter the gross income or royalties received. The percentage depletion calculation uses the amount entered here (less royalties paid) based on the production code entered in the
Production type
 field and the net income for the well.
If royalties were paid out in the current year, enter the amount in this field. This amount is subtracted from gross income to calculate the percentage depletion deduction.
If lease bonus income was received in the current year, enter the amount in this field. Gross income doesn't include lease bonus income when calculating percentage depletion. It's included as other income on the Well Net Income Report.
Enter any other income for this well. If well property was sold, enter the gain or loss in the attached statement to use when calculating well net income. The
Other income
 statement for Schedule C includes the other income amounts.
Enter any production taxes related to the well. The production tax expense transfers to the
Other deductions
 statement on Schedule C or E. Enter other taxes paid for oil and gas operations either as overhead in the OGCost screen or on the corresponding Schedule C or E.
Enter applicable dry hole expenses related to this well. The excess IDC preference calculation excludes amounts entered in this field, but the well net income calculation includes them. Dry hole expenses are included in the
Other expenses
 statement on Schedule C.
Enter the lease operating expenses. The
Other expenses
 statement on Schedule C includes any amount entered here.
Enter the other well expenses for the current year in the attached statement. The
Other expenses
 statement on Schedule C includes all expenses entered here.
For each well, the share of overhead is calculated for the cost center number in the
Cost Center #
 field in this screen. To change the overhead amount used in the well net income calculation, enter that amount here. Overhead calculated or forced is included in the
Other expenses
 statement on Schedule C.
Enter any intangible drilling costs that aren't considered qualified enhanced oil recovery expenses but that are being expensed in the current year. The excess IDC preference calculation uses the amount entered here for AMT purposes.
The excess IDC amortization rate is calculated by dividing the number of months in production by 120. The excess IDC preference adjustment calculation uses the greater of amortization rate or cost depletion rate. To use a rate different from the calculated value, enter the appropriate rate in this field.

Percentage Depletion

The percentage depletion deduction is calculated and limited based on the production type entered in this screen. To use an amount different from the calculated value, enter your non-limited amount here.
The percentage depletion rate is determined by the
Production type
 field in this screen. To use a rate different from the calculated value, enter your rate in this field.
Enter the depletion carryover from prior years. If cost depletion is greater than percentage depletion for a well with a carryover entered, the carryover will still be allowed, provided it passes the 65% of taxable income limitation. In future years, the percentage depletion carryover amount will proforma to this field.
The excess percentage depletion over adjusted basis calculates automatically based on entries in this screen. Any entry in this field adjusts the basis for calculation of the preference depletion adjustment for AMT purposes.
For Schedule K-1 pass through entities, enter the net number from Schedule K-1 gross income from oil and gas activities, less the deductions from oil and gas activities. This field is used to limit the percentage depletion deduction to well net income.

Depreciation

The regular tax depreciation amount automatically transfers to the oil / gas well schedule associated with this screen. To use your own amount, enter the amount here. Force entered here won't carry to Schedule C or E; use input screens related to those schedules.
If you entered assets for this well in the asset module, the limited section 179 expense automatically transfers to the oil / gas well schedule associated with this screen. To use an amount different from the calculated amount, enter your amount here.
Enter last year's regular tax section 179 carryover. In future years, this information will proforma automatically to this field.
The AMT depreciation expense transfers to this field. To use an amount different from the calculated amount, enter the appropriate AMT depreciation expense in this field. The AMT well net income calculation uses the amount entered here for excess IDC preference adjustment calculation purposes.

Cost Depletion

Enter the cost or basis of the depletable property. The cost depletion deduction calculation uses the amount entered here as the starting point. This field is mandatory when using the alternate cost depletion method.
Enter the accumulated depletion. This amount is subtracted from the leasehold cost to determine the cost depletion deduction. The cost depletion deduction is limited to the adjusted basis (leasehold cost less accumulated depletion).
Enter the AMT accumulated depletion. This amount is subtracted from the leasehold cost to determine the AMT cost depletion deduction. The AMT cost depletion deduction is limited to the adjusted basis (leasehold cost less accumulated depletion), and it is used to determine the AMT depletion preference adjustment.
Enter the beginning reserves in barrels. If you don't know the beginning reserves, the alternate cost depletion method is available.
Enter the current-year production in barrels. If you don't know the current production, the alternate cost depletion method is available.
The cost depletion deduction calculation is based on entries in this section. To use an amount that is different from the cost depletion deduction, enter that amount here. This amount is compared with the percentage depletion deduction to determine the greater of the 2. The cost depletion deduction isn't limited to the adjusted basis.
Enter the average price per barrel in the current tax year, of the oil or gas produced by this well. The alternate cost depletion method divides gross income by this amount to determine the current production in barrels.
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