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Linn Energy, LLC Message Board

  • alschroed alschroed Apr 6, 2013 10:08 AM Flag

    Tax question for K-i

    I could not do the K-i using H&R block software so I went to an accountant. He said it is passive income in box 1 so I can only deduct the box 13 intangible drilling costs up to the amount of income in box 1 which leads me a passive expense carry over of the unused intangible drilling costs. Also the box 20 which is supplemental information list depletion which the accountant didn't use. Can someone explain, Is the K-1 LINE box 1 a passive activity? and do I get to deduct depletion costs from box 20 T supplemental information?

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    • Yes, it is passive and excess losses carried forward. Accountant correct on that point.

      You should claim depletion and it will be a significant amount. Ike the 13J it will be carried forward if exceeds box 1, however you will eventually be able to use it (at latest when you sell), so in this case your accountant is wrong and is costing you money.

    • If you look at the graphic included in your K-1 package, you'll see that Line 1, 13-J and 20-T all are combined and are entered on Part II of Schedule E.

      Despite what your accountant says, I have always used the highest number of 20T1 or 20T2 (along with the amount on 13J) to offset the amount on line 1.

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