Businesses deduct percentage depletion when they sell the natural resource and they deduct cost depletion in the year they produce or extract the natural resource.

Question

Quizplus · Accepted Answer

Businesses can use both percentage depletion and cost depletion for tax purposes, but they are used in different ways. Percentage depletion is used when a natural resource is sold, while cost depletion is used in the year the resource is produced or extracted.

Businesses Deduct Percentage Depletion When They Sell the Natural Resource