300,000\ prilling costs \ 80,000

\ Equiphent\ The well on Lease B was completed early in January 20XC and was successful.\ 10,000 barrels of on share of production from the well was 10,000 barrels of oil. All\ al vear-end was 300 , were sold during 20XC. Black's share of estimated reserves\ Bwas abandoned early in Jarease A was abandoned in March 20XC, and Lease\ REQUIRED:\ a. Determine the tax effects for the above transactions in each year, assuming\ Black is an independent producer. Ignore percentage depletion but remember\ DD&A.\ b. Determine any tax effects that would be different if Black were an integrated\ producer rather than an independent producer.\ On March 1, 20XA, Bryce Mott purchases mineral rights (MR) for

$80,000

. On\ June 1,20XA, he leases the mineral rights to Hampton Oil Company, retaining\ a 1/8 royalty interest (RI). Hampton Oil Company pays Mott a lease bonus of\

$5,000

. On June

1,20xB

, a delay rental of

$1,000

is received by Mott. Oil royal-\ ties of

$30,000

are paid to Mott in 20XC. Reserves at 12/31/20XC are 20,000\ barrels, and production and sales for the year are 3,000 barrels. The reserve,\ production, and sales data apply only to Bryce Mott.\ REQUIRED: Determine the tax basis of any assets owned by Bryce Mott and the\ amount of any tax revenues reported and any tax deductions taken by Bryce Mott\ in each of the three years.

Eq on Lease B was completed early in January 20XC and was successful. The "Petroleum's share of production from the well was 10,000 barrels of oil. All 10,000 barrels of oil were sold during 20XC. Black's share of estimated reserves at year-end was 300,000 barrels. The selling price of the oil was $110/bbl, and lifting costs were $400,000. Lease A was abandoned in March 20XC, and Lease B was abandoned early in January 20XD. No oil was produced during 20XD. REQUIRED: a. Determine the tax effects for the above transactions in each year, assuming Black is an independent producer. Ignore percentage depletion but remember DD\&A. b. Determine any tax effects that would be different if Black were an integrated producer rather than an independent producer. 12. On March 1, 20XA, Bryce Mott purchases mineral rights (MR) for $80,000. On June 1,20XA, he leases the mineral rights to Hampton Oil Company, retaining a 1/8 royalty interest (RI). Hampton Oil Company pays Mott a lease bonus of $5,000. On June 1,20XB, a delay rental of $1,000 is received by Mott. Oil royalties of $30,000 are paid to Mott in 20XC. Reserves at 12/31/20XC are 20,000 barrels, and production and sales for the year are 3,000 barrels. The reserve, production, and sales data apply only to Bryce Mott. REQUIRED: Determine the tax basis of any assets owned by Bryce Mott and the amount of any tax revenues reported and any tax deductions taken by Bryce Mott in each of the three years