Depletion is the using up of natural resources by mining,
quarrying, drilling, or felling. The depletion deduction allows an
owner or operator to account for the reduction of a product's
reserves.
There are two ways of figuring depletion: cost depletion and
percentage depletion. For mineral property, you generally must use the
method that gives you the larger deduction; for standing timber, you
must use cost depletion.
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