Charles Purchases an Interest in a Uranium Mine for $2,500,000

question 5

Multiple Choice

Charles purchases an interest in a uranium mine for $2,500,000 on June 7, 2014. Recoverable tonnage is estimated at 500,000. During 2014, 25,000 tons are mined and sold for $800,000. Charles incurs $500,000 of expenses during 2014. The percentage depletion rate for uranium is 22%. What is the depletion deduction for 2014?

• A) $125,000
• B) $150,000
• C) $176,000
• D) $200,000
• E) $250,000

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