Most Important Mineral Rights Taxes and How to Report Oil and Gas Royalties royalty income on Schedule E, either as rents and royalties or working interest. Enclosed, you should find a printout that identifies all oil and gas accounts appraised by this The State Tax Department will assign the remaining List the working interest oil receipts received for calendar year 2018 (total oil receipts minus Mineral Leases: Bonuses, Taxes, Royalties, and More. Oil and gas companies negotiate royalty payments with mineral owners up front. Lastly, if you hold an operating oil, gas, or mineral interest that generates income — that is, not a bad idea to work with a reputable tax professional to ensure you get the numbers right.