Which of the Following Statements About the Depletion Deduction Is

question 69

Multiple Choice

Which of the following statements about the depletion deduction is false?

• A) Firms can deduct the greater of cost depletion or percentage depletion for the year.
• B) Percentage depletion is a tax preference item.
• C) The depletion deduction can never exceed the unrecovered cost basis in the depletable asset.
• D) Percentage depletion is not based on any actual decrease in the expected productive value of a mine or well.