Hello - was wondering if i could get some thoughts on the following I cannot seem to find anything specific in the tax guidance:
Customer runs a gravel pit operation on Sch C we use the % depletion based on gross revenues. Client cleared land to extend size of gravel pit to the tune of $30k. As we are using % depletion the basis of pit doesn't have a bearing on depletion, can we take the $32k as an expense versus capitalizing it? I know land clearing usually adds to the basis of say a building but in my eyes this seems like something to just expense. I have seen some guidance but it seems to apply to farming.
Any thoughts are appreciated.