Percentage depletion for tax purposes provides a business deduction even when the cost basis has been reduced to zero.

Question

Quizplus · Accepted Answer

Percentage depletion allows taxpayers to deduct a percentage of gross income derived from the sale of certain natural resources, such as oil, gas, and minerals, regardless of the cost basis or the depletion taken in prior years. Therefore, it may provide a deduction even when the cost basis has been reduced to zero.

Percentage Depletion for Tax Purposes Provides a Business Deduction Even