What is Oklahoma depletion?

Oklahoma depletion on oil and gas well production, at the option of the taxpayer, may be computed at 22% of gross income derived from each Oklahoma property during the taxable year.

Any depletion deduction allowable is the amount so computed minus federal depletion claimed. If Oklahoma options are exercised, the federal depletion not used due to the 65% limit may not be carried over.

A complete detailed schedule by property must be furnished. If you're mailing your return, be sure to include the schedule with your return. If you're e-filing your return, retain the schedule in your records for three years in case the Oklahoma Tax Commission requests it.

Lease bonus received is considered income subject to depletion.

Major oil companies, as defined in 52 OS Sec. 288.2, when computing Oklahoma depletion are limited to 50% of the net income (computed without the allowance for depletion) from each property.

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