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Screen OGWell - Oil and Gas Well Information (1065)
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Overview
Use this screen to enter oil and gas well information.
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This screen is visible only if you have purchased the add-on UltraTax CS/Oil & Gas module.
The application uses the information in this screen to automatically generate the reports and schedules listed in the following table.
Report | Description |
|---|---|
Oil and Gas Well Schedule | Worksheet of each well's net income and depletion calculation |
Well and Lease Income Report | Well net income calculation |
Federal Depletion Report | Cost and percentage depletion calculations |
Partner's Oil and Gas Summary Schedule | Partner's summary of well net income |
Partner's Well Net Income Report | Partner's report of individual wells |
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Electronic Filing Note:
See General and input screen-specific topics for electronic returns for data-entry guidelines to prevent electronic filing rejections.General Information
Cost center #
Enter the cost center number with which this well is associated. The cost center you select determines the overhead expense allocation for this well. For information about entering the cost center, see the OGCost Screen. This field is mandatory.
Well or Lease #
Enter a unique well or lease number. You must not have already used this number on another unit of this screen that uses the same cost center number. This field is mandatory.
Description
Enter a unique well description. The description is printed on all reports to distinguish this well from others. This field is mandatory.
Specially allocate
You can specially allocate well activity in total or individually. For total allocation of well activity, enter the allocation scheme data using the Ptr Alloc button in the heading of this screen. For individual allocation, enter the allocation scheme data using any or all of the other Ptr Alloc buttons in this screen. Items that are not specially allocated will default to the profit percentage. You cannot mix total and individual allocations within an activity.
You may use only the percentage or units allocation methods for oil and gas well amounts when you specially allocate this well’s information in total, because the application uses the one allocation for multiple income and expense amounts.
If you specially allocate this well's information (in total or individually), the net income (loss) of the well associated with Page 1 moves to Schedule K, Other income (loss).
Date placed in service or transferred
The application uses the date you enter for reporting purposes on the oil and gas well schedule and to calculate cost depletion using an alternate method when beginning reserves and accumulated depletion are unknown.
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The application does not use this date to determine if the well is eligible for percentage depletion.
Production type
Enter the production type code. If you leave this field blank, the application defaults to primary production. The production type you enter determines the type of percentage depletion the application calculates for each well.
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- For marginal production, the application defaults to 15 percent for the current year. To specify a different percentage for marginal production for all 1065 clients, enter the percentage in theDepletion: Marginal oil production percentage depletion ratefield in the Other tab in the Other Return Options dialog. To open this dialog, choose Setup and then 1065 Partnership, and select the Other Return Options button.
- The tentative percentage depletion that the application calculates is limited to 100 percent of well income before depletion and is passed through to the appropriate partners. There is no further limitation to 65 percent of taxable income because the partner's taxable income cannot be readily determined at the partnership level.
Lease Income and Expenses
Lease income: Gross income or royalties received
Enter the gross income or royalties received. The application uses the amount you enter, less royalties paid, to calculate percentage depletion based on the production code in the
Production type
field.Lease income: Royalties paid
If royalties were paid out in the current year, enter the amount. The application subtracts this amount from gross income to calculate percentage depletion.
Lease income: Lease bonus income
If the partnership received lease bonus income in the current year, enter the amount. The application does not include lease bonus income as gross income when calculating percentage depletion, but does include it as other income on the Oil and Gas Well and Lease Income Reports.
Lease income: Other income
Use the statement to enter any other income for this well. If a sale of well property occurred, enter the gain or loss for use in calculating well net income. The application does not include other income as gross income when calculating percentage depletion, but does include it as other income on the Oil and Gas Well and Lease Income Reports.
Lease expenses: Guaranteed payments
Enter the guaranteed payments of the well for the current year. Any amount you enter here is included in the statement on Page 1, Other deductions; Form 1125-A, Other costs; or Schedule K, Other deductions. The application also includes this amount on Schedule K, Guaranteed payments.
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Guaranteed payments entered on screen OGWell in the K1 1065, 1041 – Passthrough Partnerships and Trusts folder are included on the Oil and Gas Well Schedule only.
Cost Depletion
Use this section to enter amounts for calculating cost depletion. The Oil & Gas module offers an alternate method of calculating cost depletion for those clients who do not know the accumulated depletion, beginning reserves, or current year production amounts. If you enter a number in the
Expected production life of well or lease
field and an amount in the Average price per barrel in current year
field, the application uses the alternate calculation. This alternate calculation is described in the Expected production life of well or lease
field.Leasehold cost or other basis
Enter the cost or basis of the depletable property. The application uses this amount as the starting point in calculating the cost depletion deduction. This field is mandatory when using the alternate cost depletion method.
Accumulated depletion
Enter the accumulated depletion. The application subtracts this amount from the leasehold cost to determine the adjusted basis. The application automatically limits the cost depletion deduction to the adjusted basis. If accumulated depletion is unknown, the application provides an alternate method of calculating cost depletion. This method is described in the
Expected production life of well or lease
field.Beginning reserves in barrels / Current year production in barrels
Enter the amounts in barrels. If these amounts are unknown, the application provides an alternate method of calculating cost depletion. This method is described in the
Expected production life of well or lease
field.Cost depletion deduction (Force)
The application automatically calculates the cost depletion deduction based on entries in this section. To override the calculated cost depletion deduction, enter the appropriate deduction. If you enter an amount, the application still compares it with the calculated percentage depletion deduction to determine the greater of the two.
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The application does not limit the cost depletion deduction to adjusted basis if you enter an amount in this field.
Expected production life of well or lease
The application provides an alternate method for calculating cost depletion when beginning reserves and/or accumulated depletion are unknown.
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You must enter a date in the
Date placed in service or transferred
field for the alternate method to calculate properly. The application uses this date to determine the number of years in service prior to this year when calculating the accumulated depletion amount for the alternate cost depletion method.The only amounts that need to be known are the leasehold cost, gross income, production life of the well, and average price per barrel of oil. When you enter an expected life and the average price per barrel, the application calculates cost depletion using the following formula.
- Leasehold cost times number of years in service to date / expected production life = accumulated depletion.
- Leasehold cost less accumulated depletion (calculated above) = adjusted basis.
- Gross income / average price per barrel = current production.
- Expected production life times current production (calculated above) = beginning reserves.
- Adjusted basis (calculated above) / beginning reserves (calculated above) = unit cost.
- Current production (calculated above) times unit cost (calculated above) = cost depletion deduction.
Depreciation
Depreciation (Force)
The application automatically transfers depreciation from the asset module to this well if you select the well in the
Oil & Gas
association field. Enter an amount, including 0 (zero), to override the calculated amount.note
- To specially allocate tax depreciation from the asset module for this well, you must enter the allocation two times. First, specially allocate the assets in the asset tab. Then select the Ptr Alloc button in this screen to specially allocate the depreciation associated to the well.
- The application does not transfer the amount you enter here directly to Page 1 or Schedule K. If you enter an amount in this field, you must also go to the corresponding screen and force the depreciation amount.
Section 179 expense (Force)
The application automatically transfers section 179 expense from the asset module to this well if you select the well in the
Oil & Gas
association field. Enter an amount, including 0 (zero), to override the calculated amount.note
- To specially allocate section 179 expense transferred from the asset module for this well, you must select the Ptr Alloc button in this screen.
- The application does not transfer the amount you enter here directly to Page 1 or Schedule K. If you enter an amount in this field, you must also go to the corresponding screen and force the section 179 expense amount.