Erin owns a mineral property that had a basis of $10,000 at the beginning of the year.The property qualifies for a 15% depletion rate.Gross income from the property was $120,000 and net income before the percentage depletion deduction was $50,000.What is Erin's tax preference for excess depletion?
A)$8,000
B)$10,000.
C)$18,000.
D)$0.
E)None of the above.

Question

Quizplus · Accepted Answer

Depletion = $120,000 x 15% = $18,000Excess depletion = $18,000 - $10,000 = $8,000

Erin Owns a Mineral Property That Had a Basis of $10,000