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During early 20XA, Terry Petroleum incurred G&G costs of $45,000 for Project Area 12. As a result of the G&G, three areas of interest
During early 20XA, Terry Petroleum incurred G&G costs of $45,000 for Project Area 12. As a result of the G&G, three areas of interest were identified. Detailed G&G was conducted on the areas of interest at the following costs: Interest Area 123 Cost $80,000 50,000 60,000 As a result of the detailed G&G studies, the following leases were acquired: Interest Area Lease Acres Interest A 2,000 100% of WI B 3,000 50% of WI C 6,000 25% of WI 23 D 5,000 100% of WI None None None REQUIRED: Determine the tax basis of any assets and the amount of any tax deductions.
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