Big Tree Petroleum incurs G&G costs of $21,000 for Project Area 12.

Three areas of interest are identified. Detailed G&G is conducted on the areas of interest at the following costs:

As a result of the detailed G&G studies, the following leases were acquired:

Determine the tax basis of any assets and the amount of any tax deductions.

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Interest Area Cost 1 $55,000 23 2 60,000 3 70,000