Mark, a 50% partner in the X & Y Partnership, uses the percentage method to compute his depletion allowance for the gas and oil property owned by the partnership. His allocable share of the property is $100,000. The fair market value of the property also is $100,000. His taxable income for 2022 equals $65,000. The percentage depletion rate is 15% for natural gas and oil sold. X & Y is a small producer, and the average daily production does not exceed the depletable oil and gas quantity. Mark's share of the gross sale of oil and gas deposits was $30,000. What is Mark's depletion deduction for 2022?

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Determining Marks Depletion Deduction for 2022 Since X Y is a small producer and Marks allocable sha... View the full answer