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This tax worksheet calculates percentage depletion for taxpayers with a working interest in an oil and gas property and it tracks the statutory (percentage) depletion carryover resulting from the 65% of taxable income limitation.

Mineral property includes oil and gas wells, mines, and other natural deposits (including geothermal deposits). For this purpose, the term “property” means each separate interest a taxpayer owns in each mineral deposit in each separate tract or parcel of land. A taxpayer can treat two or more separate interests as one property or as separate properties.

A taxpayer cannot claim percentage depletion for an oil or gas well unless at least one of the following applies:

• The taxpayer is either an independent producer or a royalty owner, or
• The well produces natural gas that is either sold under a fixed contract or produced from geo-pressured brine.

Footnotes

1. For marginal production property, the percentage depletion rate is 15%.
2. See the Depletion - Cost Depletion Schedule tax worksheet.

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