cost depletion

cost depletion

Depletion calculated as a percentage of the original cost of a natural resource that is consumed during a period. See also percentage depletion.

Cost Depletion

A method for recovering the taxpayer's investment in natural resources or timber. The cost is recovered proportionately as the resource is extracted or the timber harvested. Also see "Percentage Depletion."
References in periodicals archive ?
In addition to the tax booklet the Sabine website will also offer two simple calculators for computing the income and expense amounts and the cost depletion.
The amount of taxable royalties, but not land lease payments, may be reduced by a depletion deduction, calculated either under the percentage depletion method or the cost depletion method.
As discussed below, qualification for the bulk sale exception directly affects the taxpayer's ability to use the most advantageous method of calculation for cost depletion.
Depletion after 1989 is cost depletion, which had previously been the same method used for regular tax purposes.
Others may use cost depletion deduction which is limited to the taxpayer's cost basis in the property.
The tax provision reflects a benefit for percentage depletion in excess of cost depletion for iron ore that we produce and consume or sell.
Although there are two available methods of depletion, cost depletion and percentage depletion, generally oil and gas operations may use only the cost depletion method (Regs.
Examples of category II costs are marketing, advertising, selling, distribution & handling, research, engineering, casualty and theft loss, percentage depletion in excess of cost depletion, income taxes, general and administrative (overall activities), and bidding expenses.
For property placed in service in tax years beginning after 1989, depletion must be determined under the cost depletion method.
The increase is due primarily to higher relative production and cost depletion rates.
In addition to the tax booklet the Permian website also offers two simple calculators for computing the income and expense amounts and the cost depletion.
1446-2(b), no deduction is allowed in computing a partnership's ECTI for: (1) charitable contributions; (2) personal exemptions; (3) additional itemized deductions normally allowed for individuals; (4) losses on sales or exchanges of capital assets, except to the extent of gains from such sales; or (5) depletion in excess of cost depletion.