Wes acquired a mineral interest during the year for $10 million. A geological survey estimated that 250,000 tons of the mineral remained in the deposit. During the year, 80,000 tons were mined and 45,000 tons were sold for $ 12 million. other expenses amounted to $5 million. Assume the mineral depletion rate is 22%.
1. what is the taxable income before the deduction for depletion? _______
2. under cost depletion, what is the amount of the deduction? ________
3. under percentage depletion, what is the amount of the deduction? ________
4. Wes's lowest taxable income after the depletion deduction is _______