Knowledge Base

10080: 1120S - Depletion

1120S S corporation

Where do I enter depletion for an 1120-S return? Does the software calculate it automatically?

Enter depletion amounts (except for oil and gas depletion) on line 15 of the DED screen. Drake Tax does not calculate these depletion amounts – you must calculate depletion separately before making an entry.

  • Amounts entered here adjust any depletion flowing from any K1F screen, line 9 Directly apportioned deductions, code B - Depletion.

Timber depletion

Use Form T to determine timber depletion. Enter the final amount on the DED screen, line 15. Attach the completed form to the return as a PDF.

Oil and gas depletion

The S corporation cannot deduct depletion on oil and gas wells. Each shareholder must determine the allowable amount to report on the shareholder's return. See the 1120-S Instructions for Schedule K-1, line 17, "Depletion information–oil and gas (code R)," for the oil and gas depletion information that must be supplied to the shareholders by the corporation. You can use the DEPL screen for oil and gas depletion. This will generate Wks DEPL in the view mode showing the totals. In each of the K-1 sets, you will see K-1 DEPL showing that shareholder's allocable amount.

Drake entry fields for oil and gas depletion information are:

  • Screen K1P, field 20 Other information, code T - Depletion information - oil and gas (for a K1P received by the corporation).
  • Screen K, Other Information tab, field 17R - Information needed to figure depletion - oil and gas (adjusts amounts carried from K1P screen, field 20, code T).
  • Screen K1E > Overrides tab: 
    • Field 17 Other information, code R Depletion information - oil and gas (override)
    • Basis Wks tab, field 7b Oil and gas depletion.

In a 1040 return for a shareholder, use screen DEPL to make entries. See Related Links below for more information about entry in the 1040 package.  

See IRS Publication 535 Business Expenses for more information on reporting oil and gas depletion.

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