Eula Owns a Mineral Property That Had a Basis of $23,000

question 24

Multiple Choice

Eula owns a mineral property that had a basis of $23,000 at the beginning of the year.Cost depletion is $19,000.The property qualifies for a 15% depletion rate.Gross income from the property was $200,000, and net income before the percentage depletion deduction was $50,000.What is Eula's AMT preference for excess depletion if she maximized her regular tax depletion deduction?

• A)$15,000
• B)$23,000
• C)$25,000
• D)$2,000

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Definitions:

Basalt

A dark, fine-grained volcanic rock that forms from the rapid cooling of basaltic lava, composing much of the ocean floor and volcanic islands.

Problem Solving

The process of identifying a problem, developing potential solutions, and implementing a course of action to resolve the problem.

Superordinate Goals

Goals that are important enough to require the cooperation of two or more individuals or groups to achieve.

Compromise

An agreement or a settlement of a dispute reached by each side making concessions, often regarded as an effective way to resolve conflicts.