Jimmy Acquires an Oil and Gas Property Interest for $600,000

question 63

Multiple Choice

Jimmy acquires an oil and gas property interest for $600,000.Jimmy expects to recover 200,000 barrels of oil.Intangible drilling and development costs are $160,000 and are charged to expense.Other expenses are $40,000.During the year,25,000 barrels of oil are sold for $800,000.Jimmy's depletion deduction is

• A)$120,000.
• B)$75,000.
• C)$160,000.
• D)$600,000.

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