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3. Calculate the cost depletion allowance and percentage depletion allowance. Indicate which is the most favorable calculation method for tax purposes. Data Cost of acquiring mineral rights Recoverable reserves estimate Allowable Percent Depletion Rate for Coal Minerals sold, year t Mineral Sales Revenue, year t Taxable Income w/ no depletion write-off, year t $3,000,000 1,875,000 tons 125,000 tons $118,000 $531.000 ost Depletion Allowance Preferred Option to Minimize Taxes 3. Calculate the cost depletion allowance and percentage depletion allowance. Indicate which is the most favorable calculation method for tax purposes. Data Cost of acquiring mineral rights Recoverable reserves estimate Allowable Percent Depletion Rate for Coal Minerals sold, year t Mineral Sales Revenue, year t Taxable Income w/ no depletion write-off, year t $3,000,000 1,875,000 tons 125,000 tons $118,000 $531.000 ost Depletion Allowance Preferred Option to Minimize Taxes