Calculate cost depletion

When beginning reserves or accumulated depletion are unknown, UltraTax CS gives an alternate method to calculate cost depletion. The only amounts needed include the leasehold cost, gross income in the current year, production life of a well, and the average price per barrel of oil for the current year. When you enter an expected life in this field, as well as the average price per barrel, cost depletion calculates using the following formula.
  • Leasehold cost multiplied by (number of years in service to date divided by total production life) equals Accumulated Depletion
  • Leasehold cost less accumulated depletion (calculated previously) equals Adjusted Basis
  • Gross income divided by average price per barrel equals Current Production
  • Expected production life multiplied by current production (calculated previously) equals Beginning Reserves
  • Adjusted basis (calculated previously) divided by current production (calculated previously) multiplied by total production life equals Unit Cost
  • Current production (calculated previously) multiplied by unit cost (calculated previously) equals Cost Depletion Deduction
Chat now

error-icon

Triva isn't available right now.

Check out the support page for our phone number and hours

error-close