If you own mineral rights or receive royalty checks, your tax return is more complicated than most. At Orsak Langner & Barthel PLLC, we help Houston-area and Texas mineral and royalty owners report oil & gas income correctly—capturing depletion, sorting out interest types, and making sense of the K-1s and 1099s tied to your division orders.

When a producer pays you for oil or gas pulled from your land, the IRS treats that income differently than wages, rent, or dividends. Get the details right and you keep more of every check. Get them wrong and you either overpay or invite questions you don't want.

We help owners:

• Calculate and apply depletion—including the percentage depletion allowance many royalty owners qualify for
• Distinguish royalty interests from working interests and report each on the correct schedule
• Handle intangible drilling costs (IDCs) and other deductions for owners who hold a working interest
• Untangle lease bonus payments, delay rentals, and shut-in payments
• Reconcile Form 1099-MISC royalties, partnership K-1s, and division-order statements that rarely agree at first glance

• Depletion deductions — cost vs. percentage depletion, and which gives you the larger allowable deduction each year
• Working vs. royalty interest — active income (often subject to self-employment tax) vs. passive/portfolio income, and the very different tax treatment of each
• Intangible & tangible drilling costs — deductions available to working-interest owners
• Lease bonus & rental income — proper ordinary-income treatment and timing
• Multi-state & K-1 reporting — for owners with interests across states or held through partnerships and LLCs
• Coordination with your estate plan — minerals are often a family's longest-held asset

• Mineral and royalty owners receiving 1099s or division-order income
• Families who inherited minerals and aren't sure how they're taxed
• Working-interest investors in drilling partnerships and joint ventures
• Ranch and landowners whose property also produces mineral or royalty income

At Orsak CPAs, our goal is simple: make sure your mineral and royalty income is reported accurately, with every deduction you're entitled to, so you keep more of what your land produces.

Depletion recognizes that every barrel produced permanently reduces the resource you own. As an owner, you may deduct depletion against your royalty income each year—but only if it's calculated correctly.

• Cost depletion spreads your basis in the mineral property over the units produced and sold.
• Percentage depletion allows eligible owners to deduct a fixed percentage of gross income from the property, subject to net-income and taxable-income limits.

We calculate both methods, apply the one that produces the larger allowable deduction, and carry forward what the limits defer. For inherited minerals, we also help establish the stepped-up basis that drives your cost depletion.

These two phrases sound similar and are taxed very differently:

• A royalty interest entitles you to a share of production free of operating costs. It's generally passive or portfolio income, reported without self-employment tax.
• A working interest bears its share of drilling and operating costs. It's typically active business income—often subject to self-employment tax—but it also unlocks deductions like intangible drilling costs.

Reporting one as the other is a common and costly mistake. We confirm what you actually own and place it on the right schedule.

• Annual depletion analysis — cost and percentage methods, with limit tracking and carryforwards
• Interest classification — confirming royalty vs. working interest and the correct reporting for each
• IDC and operating-cost deductions — for working-interest owners and drilling-partnership investors
• K-1 and 1099 reconciliation — tying division orders, partnership reports, and IRS forms together
• Basis and inheritance planning — establishing and documenting basis for inherited or gifted minerals
• Coordination with planning — aligning royalty income with your overall tax planning and estate strategy

Most tax preparers see a royalty 1099 a handful of times a year. We see them constantly. Based in Houston—the energy capital—our team understands lease language, division orders, and the difference between a check that's been calculated correctly and one that hasn't.

With Orsak Langner & Barthel PLLC, you get:

• Accurate reporting of every interest type you hold
• Depletion calculated to your full allowable benefit
• Clean coordination across states, partnerships, and your estate plan
• A CPA who speaks the language of Texas oil & gas

If your minerals also sit under working ranch or farm land, see our Ranch, Farm & Landowner Tax services, and explore Estate & Trusts for passing minerals to the next generation.