taxes..depreciation. coal royalities help?

Question

hi ..I normally have h&r block do my taxes...BUT I am trying to do them on my own this year..I bought their tax software and have a question..

Part of my income comes from land in which I get a coal residual...basically allowing a company to strip mine my land for a royality in exchange..
Now in the past the lady at H&R block took a depreciation of like 10 percent for capital gains..basically taking into account that the coal on the land won't last forever..it is a limited resourse..
the problem comes in the fact that this years revenue wasn't thousands of dollars like in the past but a measily 300 dollars
(H&R block normally charges me around this to do my taxes..lol..hense the reason I am trying to do them myself:>)
when I try to plug this sum into the computer...it comes up weird..like the depreciation is less than the sum??? if this makes sence..
please give me your opinion...

Answer 1

I can give you a partial answer.
You put income from royalties on Schedule E
Depletion goes on line 20
Depletion for mining can be figured by two methods, cost and %. I'd guess HR has used % in the past. I am thinking for coal the % is 15% of gross you received. You could look at your past years return and see what % HR used as depletion.
some states use higher % than for federal. Hope this helps some, not a very complete answer.