If the gas company refuses to change it you have a couple of choices. These all are under assumption that your lease does not specify that the bonus money is an advance royalty payment.
1. If you have expenses (like legal fees) to offset the income then it is very important that you file it as rents since you want to be able to take the expenses. I would file the Sch E with the income in rents and attach a copy of your lease and an explanation documenting the fact you contacted the company and they refused to re-issue the 1099.
2. If you have no expenses put it on the Sch E as royalties and press on. The end result is taxed the same as ordinary income. Be aware that you can not take depletion on the bonus money even if you put it under royalties.
Kathy Morgan
1. If you have expenses (like legal fees) to offset the income then it is very important that you file it as rents since you want to be able to take the expenses. I would file the Sch E with the income in rents and attach a copy of your lease and an explanation documenting the fact you contacted the company and they refused to re-issue the 1099.
2. If you have no expenses put it on the Sch E as royalties and press on. The end result is taxed the same as ordinary income. Be aware that you can not take depletion on the bonus money even if you put it under royalties.
Kathy
Feb 15, 2009