Taxable income under expensing and capitalization methods

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Reference no: EM13885463

Chris purchased an oil interest for $2 million. Recoverable barrels were estimated to be 500,000. During the year, 120,000 barrels were sold for $3.84 million, regular expenses (including cost recovery) were $1.24 million, and IDCs were $1 million. Calculate Chris’s taxable income under the expensing and capitalization methods of handling IDCs.

Reference no: EM13885463

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Taxable income under expensing and capitalization methods : Chris purchased an oil interest for $2 million. Recoverable barrels were estimated to be 500,000. During the year, 120,000 barrels were sold for $3.84 million, regular expenses (including cost recovery) were $1.24 million, and IDCs were $1 million. C..

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