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.

---

Definitions:

Enamel

The hard, outermost layer of a tooth that protects it from decay.

Liver

A vital organ in the body responsible for processing nutrients from food, detoxifying harmful substances, and producing bile for digestion.

Amino Acids

Organic compounds that combine to form proteins, serving as the building blocks of life, containing both amino and carboxyl functional groups.

Esophagus

Muscular tube for moving swallowed food from the pharynx to the stomach.