ACCOUNTING QUESTIONS AND ISSUES

ACCOUNTING QUESTIONS AND ISSUES

I have been receiving several conflicting bits of advice, all from professionals regarding certain accounting issues. Time now to do the legwork to try to unravel the discord. If anyone has info/suggestions I'd be most appreciative of hearing them.

QUESTIONS

1) If the 'up front bonus money' for signing a lease is noted on the 1099 form as "Rental", can the landowner now consider his property as 'rental property' and seek to have improvements to the property considered as legitimate deductions?

2)If so are the deductions limited to the units on the property, or able to be applied to the property as a whole?

3) Can the landowner seek to have mineral depletion allowances applied, or is that only able to be used by the leasing company?

ISSUES

 If, after signing a lease as an individual land owner, would forming an LLC be appropriate?

What might the advantages and disadvantages be?

Should the royalties(if any) flow into the LLC or just go into the individual personal checking/savings account?

Many thanks for all thoughts.

Dan