Donny owns and leases a coal mine to brian. the lease agreement states that brian will pay donny $4 per ton royalty on coal mined. what is brian's percentage depletion deduction for the current year from the information given below? gross income from coal $250,000 income from trucking coal 20,000 royalty paid donny 30,000 taxable income on coal (excluding depletion) 40,000 coal depletion rate 10%

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Sonny Villarreal

12 October, 17:40

Donny owns and leases a coal mine to brian. the lease agreement states that brian will pay donny $4 per ton royalty on coal mined. what is brian's percentage depletion deduction for the current year from the information given below? gross income from coal $250,000 income from trucking coal 20,000 royalty paid donny 30,000 taxable income on coal (excluding depletion) 40,000 coal depletion rate 10%

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Chris Stanton · Answer 1

Answer: $25,000

Explanation:

Given dа ta:

Gross income from coal = $250,000

Income from trucking coal = $20,000

Royalty paid to Donny = $30,000

Taxable income on call excluding depletion = $40,000

Coal depletion rate = 10%

Lease agreement = $4/ton

Therefore:

brian's percentage depletion deduction for the current year is

= gross income x coal depletion rate

= $250,000 x 0.1

=$25,000