1099-Misc Exploration

[judys3]

A tax customer has received a hefty 1099-Misc Rent from an oil company for Exploration.  Are there any expenses he is able to take? 

[IRonMaN]

"Are there any expenses he is able to take?"

Did he incur any expenses related to the income?

[Accountant-Man]

Yes, the expenses that he paid.

[judys3]

There are no "actual" expenses the landowner incurred as it was for exploration.  I didn't know if there was something that I haven't found as far as being able to deduct a certain percent for property use.

[judys3]

There are no "actual" expenses the landowner incurred as it was for exploration.  I didn't know if there was something that I haven't found as far as being able to deduct a certain percent for property use.

[Accountant-Man]

Research "depletion." I don't think it applies to rent from exploration, but if they find something (i.e., oil, gas) then that asset would be depletable if you sold it.

[judys3]

I wondered if depletion would come in to play but since exploration I wasn't sure. Thank you for your help.

[judys3]

There are no "actual" expenses the landowner incurred as it was for exploration.  I didn't know if there was something that I haven't found as far as being able to deduct a certain percent for property use.