Create the Set
You must group oil and gas properties together by set and assign each property a set number. A set can be one oil and gas property or a group of oil and gas properties. Each set must have a unique number. You can tie multiple sets to the same form or schedule. The program uses all properties in the set to calculate income for the respective form or schedule.
- Go to the Oil and Gas screen:
- Individual - From the Input Return tab go to Income ⮕ Oil and Gas
- Partnership - From the Input Return tab go to Ordinary Income ⮕ Oil and Gas
- Corporate - From the Input Return tab go to Income ⮕ Oil and Gas
- S-Corporate - From the Input Return tab go to Ordinary Income ⮕ Oil and Gas
- Fiduciary - From the Input Return tab go to Income ⮕ Oil and Gas
- In the Oil & Gas - Set Information section:
- Enter the Set name.
- Select the applicable Form (Ctrl+T) (MANDATORY) from the drop down menu.
- Complete all other applicable entries.
Create the Property
You can enter multiple properties under each set. An oil and gas property can be one well or a group of wells. Each property must have a unique number and must be tied to a particular set. For each property, you can designate to which set the program carries the oil and gas information. The program calculates production income, expenses, and allowable depletion at the property level.
In the Oil & Gas - Property Information section:
- Enter the Description of property (i.e.: property address/location).
- Select the applicable Set name or number to include property (MANDATORY) from the drop down menu.
- Enter the Property number (MANDATORY).
- Note: Enter a unique property number for each property. If a property has more than one well, enter the same property number for each well within that property. The property number prints beside the property description on all supporting statement reports.
- Enter the Date placed in service (MMDDYY/-MMDDYY) (negative date= various).
Gross Percentage Depletion
Complete all applicable entries by clicking the Details button and navigating to the Production Information subsection.
- Production type
- Note: The program will default to 15% Primary Oil if left blank.
- Gross income
- Production tax
- Operating expense
- Dry hole expense
- Other expense
- Royalty paid
Note: Gross Percentage Depletion is calculated by subtracting the Royalty Paid from the Gross Income, then multiplying the result by the percentage rate selected in Production Type.
- Click the Details button.
- Scroll down to the Cost Depletion subsection.
- Complete all applicable entries:
- Cost or basis
- Accumulated depletion (Enter the prior depletion if any. This amount will reduce the cost or basis for the depletion calculation.)
- AMT accumulated depletion
- Beginning reserves
- Current year production
Note: If you enter information for both Percentage and Cost depletion, ProConnect will optimize and take the greater of Percentage or Cost depletion and then apply the 65 percent of taxable limitation.
Oil & Gas Schedules
Once each of the properties and sets have been created, a set of Oil & Gas schedules will be generated. Similar to the deprecation schedules, they will provide detailed information for each property to display the calculations occurring within ProConnect.
Each of the schedules listed below can be selected from the Description section when viewing the Oil & Gas Schedules.
- Oil and Gas Income (Loss) Report
- Oil and Gas Allowable Depletion Report
- AMT - Oil and Gas Income (Loss) Report
- AMT - Oil and Gas Allowable Depletion Report
- Inc. Limitation for Depletion
See Understanding how ProConnect calculates the oil and gas depletion deduction for more information.