A depletion deduction is allowed when a taxpayer has an economic interest in mineral property.
there are two ways to compute depletion - you can take the larger one.
1) percentage depletion - is based on a % of gross revenues the % varies with the type of mineral
2) cost depletion which is computed as follows "unrecovered depletable costs" dividend by the number of "estimated recoverable reserves (in units) at the beginning of the year times the units sold during the year
percentage depletion is not subject to recapture if property sold but cost depletion may be even if you didn't take it. seek professional guidance.
