Expenditures allowed as deductions under sec. 617(a) | $400,000 | |
Gross income from the property | $1,000,000 | |
22 percent thereof | 220,000 | |
Taxable income from the property, before adjustment to reflect deductions allowed under sec. 617 during year | 400,000 | |
50 percent thereof-tentative deduction | 200,000 | |
Taxable income from the property after adjustment to reflect deductions allowed under sec. 617 during year ($400,000 minus $400,000) | 0 | |
Cost depletion allowed for year | 50,000 | |
Amount by which allowance for depletion under sec. 611 was reduced on account of deductions under sec. 617 ($200,000 minus $50,000) | 150,000 | |
Adjusted exploration expenditures at end of 1971 | 250,000 |
26 C.F.R. §1.617-3