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

question 109

Essay

Rick purchased a uranium interest for $10,000,000 on January 3, 2012, when recoverable reserves were estimated at 200,000 units.A total of 10,000 units were extracted in 2012 and 7,000 units were sold in 2012.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 2012.

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Definitions:

Insider Trading

The illegal trading of a public company's stock by someone with access to nonpublic, material information about the company.

Tipping

The practice of giving money, beyond the cost of a service, to certain service workers for a job well done.

Insider Misappropriation

The illegal act of theft or improper use of insider information by a company insider to benefit from stock trades or other financial transactions.

Sixth Amendment Rights

Refers to the rights guaranteed by the Sixth Amendment to the U.S. Constitution, including the right to a speedy and public trial, an impartial jury, to be informed of the nature and cause of the accusation, to confront opposing witnesses, to have compulsory process for obtaining witnesses in one's favor, and to have the assistance of counsel for one's defense.