A method of cost recovery allowed for most natural resources, except timber.

A method of computing the allowance for depletion of an oil or gas well, or other mining of minerals, for Federal income tax purposes.

A specified percentage of the gross income from the property not exceeding 50 percent of the taxable income from the property before depletion allowance (increased by section 1245 gains--see definition of section 1245 property). In each year, the method that results in the greater deduction is used. (See also Cost Depletion.) Percentage depletion is allowed for nearly all natural resources, except timber.