Which of the following statements about the depletion deduction is false?
A. Percentage depletion is not based on any actual decrease in the expected productive value of a mine or well.
B. The depletion deduction can never exceed the unrecovered cost basis in the depletable asset.
C. Firms can deduct the greater of cost depletion or percentage depletion for the year.
D. Percentage depletion is a tax preference item.
Answer: B
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What will be an ideal response?
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What will be an ideal response?
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Indicate whether the statement is true or false