Which income tax concepts/constructs might taxpayers who take depletion deductions be violating?
I.Accounting method construct.
II.All-inclusive income concept.
III.Capital recovery concept.

A)Only statement I is correct.
B)Only statement II is correct.
C)Only statement III is correct.
D)Statements I and III are correct.
E)Statements I, II, and III are correct.

Question

Which income tax concepts/constructs might taxpayers who take depletion deductions be violating?
I.Accounting method construct.
II.All-inclusive income concept.
III.Capital recovery concept.
​
A)Only statement I is correct.
B)Only statement II is correct.
C)Only statement III is correct.
D)Statements I and III are correct.
E)Statements I, II, and III are correct.

Quizplus · Accepted Answer

Taxpayers who take depletion deductions may violate the accounting method construct if they do not use an acceptable method for determining the depletion deduction. They may violate the capital recovery concept if they continue to claim depletion deductions after their basis in the resource has been fully recovered. However, taking depletion deductions does not necessarily violate the all-inclusive income concept, as depletion deductions are generally allowed as a deduction from income.

Which Income Tax Concepts/constructs Might Taxpayers Who Take Depletion Deductions