Rick Purchased a Uranium Interest for $10,000,000 on January 3

question 23

Essay

Rick purchased a uranium interest for $10,000,000 on January 3, 2017, when recoverable reserves were estimated at 200,000 units. A total of 10,000 units were extracted in 2017 and 7,000 units were sold in 2017. Gross income from the property was $2,800,000 and taxable income without the allowance for depletion was $1,000,000. Determine the depletion deduction for 2017.

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Definitions:

Valid Acceptance

An unqualified expression of assent to the terms of an offer, forming a contract.

Present Intent

A legal term indicating a person's current intention to perform an act or designate a legal status to an item of property.

UCC

Stands for Uniform Commercial Code; a comprehensive set of laws governing all commercial transactions in the United States.

Shipment

The process of transporting goods from one place to another.