Series 7 Exam Question 71: Answer and Explanation

Question: 71

Depletion deductions may be claimed for

• A. exploratory oil and gas programs
• B. raw land real estate programs
• C. equipment leasing programs
• D. income oil and gas programs

Correct Answer: D

Explanation:

D. In order to be able to claim depletion deductions, the partnership has to be depleting a natural resource. Out of the choices given, only oil and gas programs deal with a natural resource. Exploratory programs (ones in which they're looking for oil) do not have depletion deductions until they actually hit oil and start pulling it from the ground like income programs.