Determine verns maximum depletion deduction year

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On January 15, 2016, Vern purchased the rights to a mineral interest for $3,500,000. At that time, it was estimated that the recoverable units would be 700,000. During the year, 40,000 units were mined and 25,000 units were sold for $800,000. Vern incurred expenses during 2016 of $500,000 related to the mining operations. The percentage depletion rate is 22%. Determine Vern's maximum depletion deduction for 2016.

Reference no: EM131788599

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