There are a number of factors involved in determining the depletion. I am giving you a link to the section of IRS Publication 535 which discusses the various factors and formulas to use.
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I have been asked to take a look at your question.
I will need some information, lets start with what kind of royalties do you have? are they from gas, oil, minerals, intellectual property, etc.
I need to know the following if you can give it to me:
1. What is the total reserve in your oil and gas well?
2. What was the actual annual production?
3. What was the gross income from the royalties?
the rate is 15% of your gross, but you may not be able to use that percentage.
we need to determine the actual depletion of the reserves on which you collect royalties.
so do you know the total capacity and the actual annual production during this past year.
If the (lets use well) if the well has 1 million barrels total, and they pumpted 120,000 barrels last year, I need to know that.