Jonson Corporation incurred $150,000 in capitalized acquisition costs to develop an oil well. The corporation’s geologists estimated that there were 200,000 barrels of oil in the well at the beginning of the year. Jonson produced and sold 20,000 barrels this year, earning $140,000 of gross revenue. Its operating expenses for the well totaled $25,000. Calculate Jonson’s allowable depletion deduction.
Answer to relevant QuestionsIn year 1, Firm A paid $50,000 cash to purchase a tangible business asset. In year 1 and year 2, it deducted $3,140 and $7,200 depreciation with respect to the asset. Firm A’s marginal tax rate in both years was 35 ...Firm J purchased a depreciable business asset for $62,500. Assuming the firm uses the half-year convention, compute its first-year MACRS depreciation if the asset is: a. A land irrigation system. b. Duplicating equipment. ...MRT, a calendar year corporation, placed the following assets in service this year: a. Compute MRT’s MACRS depreciation with respect to the assets placed in service this year. Assume MRT does not elect to use first-year ...Why is Section 1250 recapture inapplicable to sales of realty subject to MACRS depreciation? In year 1, Aldo sold investment land with a $61,000 tax basis for $95,000. Payment consisted of $15,000 cash down and the purchaser’s note for $80,000. The note is being paid in 10 annual installments of $8,000, beginning ...
Post your question