I did a preliminary work-up of taxes for BPT for 2012 using current income, expenses, depletion etc to update my depletion history. If they want to touch depletion, how would they deal with units that have been purchased years ago? My understanding is that tax treatment of them is as if each unit was its own oil well. That means that a certain percentage of each unuit has already been deopleted somewhat. Will they limit new reductions to new units only?
No, the only thing that might make sense related to depletion would be to disallow percentage depletion once cost depletion has already been taken for the full amount of the original investment. Haven't heard of this being considered and probably not a big deal for most investors. No way they could disallow all depletion/depreciation as it would bring a halt to most industrial activity in the country.