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.

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Definitions:

Molecule

The smallest unit of a chemical compound that can exist; composed of two or more atoms bonded together.

Orbital Space

The region of space around the Earth where artificial satellites and spacecrafts orbit, influenced by Earth's gravity.

Energy Level

A specific quantized state of energy that an electron in an atom can have.

Electrons

Subatomic particles with a negative electric charge, found in all atoms and acting as the primary carrier of electricity in solids.