1120-US: Cannot increase the accumulated adjustments account by excess depletion (FAQ)

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Question

Why doesn't UltraTax CS increase the accumulated adjustments account by excess depletion?

Answer

One of the items listed in Regulation 1.1368-2(a)(2) as an increase to the accumulated adjustments account is the excess of the deductions for depletion over the basis of property subject to depletion, unless the property is an oil or gas property the basis of which has been allocated to shareholders under section 613A(c)(11).

The increase to the accumulated adjustment account for the excess depletion only applies when the depletion is not from oil and gas depletion. Section 613A(c)(11) relates to depletion with respect to any oil or gas property.

UltraTax CS does not calculate depletion from a non oil and gas property. You must make a manual adjustment to increase AAA in Screen Ms, if applicable.

Related topic: 1120-US: Accumulated adjustments account and depletion FAQs

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