Calculate Wes's lowest taxable income, after any depletion deductions. Wes acquired a mineral interest during the year for $10,000,000. Ageological survey estimated that 250,000 tons of the mineral remainedin the deposit. During the year, 80,000 tons were mined, and 45,000tons were sold for $12,000,000. Other related expenses amounted to$5,000,000. Assume the mineral depletion rate is 22%.Calculate Wes's lowest taxable income, after any depletion deductions.

To calculate Wes's lowest taxable income after considering the depletion deductions, we must…

Answered: Wes acquired a mineral interest during…

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion

Section: Chapter Questions

Problem 56P

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Similar questions

A piece of equipment purchased at a cost $250,000 generated new income of $80,000 per year, witha annual operating costs of $10,000. The equipment was depreciated using MACRS method as 7-year property. At the end of five years, the management decided to sell the equipment for a modest price of $75,000. The company pays taxes at an effective tax rate of 23%. Which of the following was closest to the amount of taxes the company paid in year 5? $15,000 $8,000 $33,000 $11,000
Watson Tax Planning Service has the following plant assets: Communications Equipment: Cost, $6,960 with useful life of eight years; Furniture: Cost, $18,000 with useful life of 12 years; and Computer: Cost, $12,400 with useful life of four years. (Assume residual value of all the assets is zero.) Watson's monthly depreciation expense calculated using the straightline method is ________. (Round any intermediate calculations to two decimal places, and your final answer to the nearest cent.) A. $258.33 B. $72.50 C. $125.00 D. $455.83
Company J bought a piece of equipment for $200,000. This equipment has a useful life of 10 years and a salvage value of $40,000. The company has been using the seven-year MACRS property class to depreciate the asset for tax pur poses. At the end of year 4, the company sold the equipment for $120,000. The tax rate is 40%. What are the net proceeds (after tax) from the sale of the equipment?
In year 0, an electrical appliance company purchased an industrial robot costing $350,000. The robot is to be used for welding operations, classified as seven-year recovery property, and has been depreciated by the MACRS method. If the robot is to be sold after five years, compute the amounts of gains (losses) for the following two salvage values (assume that both capital gains and ordinary incomes are taxed at 34%): $20,000 $99,000
A distribution center purchased an equipment for $100,000 and has depreciated the equipment using the MACRS depreciation schedule as a 7-year property. The operating income in year 2 was $200,000 and the expenses were $87,000. If the company is in the 40% income tax bracket. i) What is the depreciation in year 2? $ ii) What is the taxable income in year 2? $ iii) What is the tax in year 2? $ iv) What is the book value of the equipment after year 2? $
In year 0, an electrical appliance company purchased an industrial robot costing $350,000. The robot is to be used for welding operations, classified as seven- year recovery property, and has been depreciated by the MACRS method. If the robot is to be sold after five years, compute the amounts of gains (losses) for the following two salvage values (assume that both capital gains and ordinary incomes are taxed at 21%): (a) $20,000 (b) $99,000 pany had sales revenues of
Barton and Barton Company (B&B) purchased construction equipment for $57 million. The equipment was placed in service at the beginning of 20x1. Management estimated the equipment's residual value to be $2 million and used the sum-of-the-years’-digits method to depreciate the equipment over a 10-year life. At the beginning of 20x4, B&B decided to change to the straight-line method. Ignoring income taxes, prepare the journal entry relating to the equipment for 20x4. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5 and 5,000,000 should be entered at 5.0).)
An electrical appliance company purchased an industrial robot costing $320,000 in year 0. The industrial robot, to be used for welding operations, is classified as a seven-year MACRS recovery property. If the robot is to be sold after five years, compute the amounts of gains (losses) for the following three salvage values, assuming that both capital gains and ordinary incomes are taxed at 35%:(a) $15,000(b) $125,460(c) $200,000
Bedox during the year purchased a coal mine for 2,000,000. It cost 500,000 to prepare the coal mine for the extraction of the coal. It was estimated that 750,000 tons of coal would be extracted from the mine during its useful life.. Bedox planned to sell the property for the amount of 100,000 at the end of its useful life. During the current year, 15,000 tons of coal were extracted and sold. What will be the depletion amount per ton for the current year?
Sequoia purchased the rights to cut timber on several tracts of land over a 15-year period. It paid $514,000 for cutting rights. A timber engineer estimates that 514,000 board feet of timber will be cut. During the current year, Sequoia cut 59,000 board feet of timber, which it sold for $914,000. What is Sequoia's cost depletion deduction for the current year?
In year 0, an electrical appliance companypurchased an industrial robot costing $350,000. Therobot is to be used for welding operations, classified as seven-year recovery property, and has beendepreciated by the MACRS method. If the robot isto be sold after five years, compute the amounts ofgains (losses) for the following two salvage values(assume that both capital gains and ordinary incomesare taxed at 34%):(a) $20,000(b) $99,000
On October 1, you purchased a residential home in which lo locale your professional office for $180,000. The appraisal is divided into $30,000 for the land and $150,000 for the building.(a) In your first year of ownership, how much can you deduct for depreciationfor tax purposes?(b) Suppose that you sold the property at $197,000 at the end of the fourth year of ownership. What is the book value of the property?

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