Royalty Depletion
Calculate percentage depletion and apply a caller-supplied taxable-income limitation.
Description
A percentage-depletion model compares a percentage of royalty receipts with supplied property income.
A percentage-depletion model compares a percentage of royalty receipts with supplied property income. The smaller amount is retained as the modeled deduction.1
Calculate percentage depletion and apply a caller-supplied taxable-income limitation.
When to use Royalty Depletion
Use this tool to calculate percentage depletion and apply a caller-supplied taxable-income limitation.
Choose the specific arithmetic or checklist scenario and establish its input amounts, dates, rates and criteria from the applicable records. Keep currencies, periods and jurisdictions consistent; review the tool-specific assumptions before interpreting the result.
How to use Royalty Depletion and understand its results
- Choose the specific arithmetic or checklist scenario and establish its input amounts, dates, rates and criteria from the applicable records. Keep currencies, periods and jurisdictions consistent; review the tool-specific assumptions before interpreting the result.
- Enter grossRoyaltyIncome, taxableIncomeFromProperty, depletionRatePercent using the field table and calculation rules, then run the tool.
- Read grossIncomeDepletion, allowedDepletion. The explanation below defines the units, signs, ordering and any flags or placeholder values.
- If the tool reports an input issue, correct the values and run it again. Apply the stated assumptions when interpreting a successfully returned result.
| Input field | Meaning | Value type; see rules below | Requirement |
|---|---|---|---|
| grossRoyaltyIncome | Gross royalty income (currency) | number; minimum: 0 | Required |
| taxableIncomeFromProperty | Taxable income from property (currency) | number; minimum: 0 | Required |
| depletionRatePercent | Depletion rate (%) | number; minimum: 0 | Required |
Supply nonnegative royalties, depletion rate and taxable property income in one currency. Return the percentage estimate and income-limited amount.
percentageAmount=grossRoyalty×rate/100; deduction=min(percentageAmount,taxablePropertyIncome) Units, indexing, boundary conditions and exceptional cases are defined in the calculation rules above.
| Output field | Meaning | Value type |
|---|---|---|
| grossIncomeDepletion | Gross-income depletion (currency) | number; minimum: 0 |
| allowedDepletion | Allowed depletion (currency) | number; minimum: 0 |
{
"input": {
"grossRoyaltyIncome": 100000,
"taxableIncomeFromProperty": 12000,
"depletionRatePercent": 15
},
"output": {
"grossIncomeDepletion": 15000,
"allowedDepletion": 12000
}
}Limitations and assumptions
The income input is used directly as the limit. Mineral eligibility, statutory income percentages, cost depletion and other deduction limits are not modeled.
Numeric inputs must be finite. Follow the calculation-specific rules for overflow, underflow and exceptional cases. Missing required fields, extra fields, wrong value types and violations of the calculation rules are input errors.
Alternative or Complementary methods
Use Royalty Withholding: Calculate royalty withholding from a caller-supplied treaty rate. For a complementary task, use Mileage Depreciation: Split a standard-mileage deduction into depreciation and non-depreciation components.
References
-
Royalty Depletion — tool.io
Similar or alternative tools
- Royalty Withholding
Calculate royalty withholding from a caller-supplied treaty rate.
- Mileage Depreciation
Split a standard-mileage deduction into depreciation and non-depreciation components.