Question

A relatively small privately owned coal-mining company has the sales results summarized below. Determine the annual percentage depletion for the coal mine. Assume the company’s taxable income is $145,000 each year. Year Sales, Tons Spot Sales Price, $/Ton 1 34,300 9.82 2 50,100 11 3 71,900 11.23 Year Gross Income, $ Depletion amount 50% of the taxable amount Allowed Depletion 1 336826 336826 65000 336826 2 551100 65000 3 807437 65000

Answer 1