On March 1, 20XA, Chuck Larson purchases mineral rights (MR) for $30,000. On June 1, 20XA, he leases the mineral rights to Grey Wolf Oil Company, retaining a 1/5 royalty interest (RI). Grey World Oil Company pays Larson a lease bonus of $10,000. On June 1, Larson receives 20XB, a delay rental of $1,000. Oil royalties of $8,000 are paid to Larson in 20XC. Reserves at 12/31/20XC are 20,000 barrels, and production and sales for the year are 3,000 barrels. The reserve, production, and sales data apply only to Chuck Larson.

Determine the tax basis of any assets owned by Chuck Larson and the amount of any tax revenues reported and any tax deductions taken by Chuck Larson in each of the three years.

Answer rating: 100% (QA)

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