Company Z incurred $45,000 in G&G costs for work performed on 100,000 acres named Project Area 15. Three areas of interest were determined based on the initial G&G work in Project Area 15, Area 1, 2, & 3. Company Z incurred costs for additional G&G work was performed for each area as follows:

Area 1  $35,000

Area 2  $55,000

Area 3  $40,000

As a result of the G&G work performed on the three areas, the following leases were entered into:

                              Lease             Acres leased    WI

Area 1              Lease A            10,000                75%

 

                        Lease B            20,000               25%

Area 2             Lease C            40,000              100%

Area 3             Not leased

 

 

What is the amount of the deduction for G&G costs incurred for Lease B in the current year?