Terry53029
Level 15
Level 15

this is the way you calculate if you use Cost depletion. (Adjusted basis of property / Total recoverable units) x Units sold during the tax year = Cost depletion deduction.

You can also use Percentage depletion. This method is calculated by applying a fixed percentage to the gross income from the property. The rate varies depending on the type of resource, which you can look up

The advantage of using percent is it may exceed your cost basis.