Long Depletion Carryover Question

[hmosbergea]

Background: Form 1041 Fiduciary Tax Return for tax year 2020 only source of income was Form 1099 Royalty.

Depletion was limited by 65% taxable income producing a c/o of depletion to tax year 2021. In 2021, the Estate closed Oct. 2021. Form 1099 Royalty income was reported for entire year.

This amount along with expenses was prorated 90% to the Estate and 10% to beneficiary.

QUESTION 1: How to calculate depletion for Form 1041 given the following: c/o from 2020 = $1,000.

Non-limited depletion (at 15%) for 2021 BEFORE c/o and BEFORE proration = $2,000.

Is depletion = 1,000 + (2,000*0.9) = 2,800? or (1,000 + 2,000)*0.9 = 2,700?

QUESTION 2: How to calculate depletion for beneficiary.

If c/o is prorated (2nd calculation above) Is beneficiary eligible for remaining c/o?

Depletion = 0 + (2,000*0.1) = 200? or (1,000 +2,000)*0.1 =300?