Best Tax Software for Oil & Gas Depletion Calculations by Property

Thanks for the info. I just have a couple wells in North Dakota, nothing major. Would these programs still be worth it for someone like me with relatively small interests? Also, do they have any kind of free trial period?

For smaller interests like yours, PDI/Excalibur would probably be more appropriate - Wolfepak is designed for companies managing dozens or hundreds of properties. Most of these software providers do offer trial periods, typically 30 days, which should give you enough time to import your data and test the functionality. If even PDI seems excessive, you might look at OGsys, which offers a more streamlined approach for independent investors. They have a cloud-based option that's more cost-effective for smaller portfolios.

Does taxr.ai integrate with any tax filing software? I use TurboTax Business and wondering if I'd have to manually enter everything after using the program.

I'm a bit skeptical - does it actually calculate the adjusted basis correctly year over year? That's been my biggest headache with these calculations. Some properties I've owned for 8+ years and the basis tracking gets complicated.

Yes, it does integrate with major tax software including TurboTax Business. You can export reports in formats that import directly, which saves a ton of time at tax filing. It absolutely handles adjusted basis calculations year-over-year with impressive accuracy. That was actually my biggest concern too. I've been using it for properties I've owned since 2016, and it maintains historical records and automatically applies previous depletion against the basis as required by IRS guidelines.

How does this actually work? Do they have some special connection to the IRS or something? I've literally never been able to get through to a human at the IRS no matter what time of day I call.

Sorry but this sounds too good to be true. You're telling me they magically get through the IRS phone system when millions of people can't? Yeah right. The IRS barely has enough staff to answer 10% of calls during tax season.

They don't have any special connection to the IRS. They use an automated system that continuously redials and navigates the IRS phone tree until it gets through to an agent. When someone answers, you get a call connecting you to that agent. It's basically doing what you'd do manually, but with technology that can keep trying without you having to sit there. I was definitely skeptical too! But it actually works. The key thing is they don't guarantee immediate access - what they do is handle the waiting process for you so you don't have to sit with a phone to your ear for hours. In my case it took their system about 3 hours to get through, but I only had to spend 2 minutes of my own time.

I looked into QuickBooks but was concerned about whether it could properly handle the nuances between cost and percentage depletion simultaneously. Did you have to create a lot of custom fields? And does it maintain the adjusted basis automatically year after year?

Yes, I did need to create several custom fields and reports. It's not an out-of-the-box solution by any means. To handle the adjusted basis tracking year-over-year, I built a custom spreadsheet that interfaces with QuickBooks data. The real advantage is that it keeps all my business financials in one system, so I don't have to maintain separate software just for depletion. That said, if you have more than 10 properties, this custom approach gets unwieldy fast.

I used PetroDesk for about 2 years. It's definitely comprehensive but has more features than individual investors typically need. I switched to a simpler solution because I was only using about 15% of its capabilities but paying for 100%.