Determining depletion deduction

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On January 15, 2008, Robin purchased the rights to a mineral interest for $6,000,000. At that time, it was estimated that the recoverable units would be 2,500,000. During the year, 300,000 units were mined and 175,000 units were sold for $3,000,000. Robin incurred expenses during 2008 of $1,000,000. The percentage depletion rate is 22 percent. Determine Robin's depletion deduction for 2008.

a. $1,000,000.

b. $840,000.

c. $660,000.

d. $420,000.

e. None of the above.

Reference no: EM13150150

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