Final answer:
Depletion for a sole proprietor is reported on Schedule C, not Schedule D. The allocation of the cost of natural resources over time is considered a business expense and not a capital gain or loss.
Step-by-step explanation:
The question 'Depletion reported by a sole proprietor is reported on Schedule D?' asks whether the reporting of depletion for a sole proprietor should be done using Schedule D on their tax return. The answer to this question is false. Depletion, which is the allocation of the cost of natural resources over time, is not reported on Schedule D, which is used for reporting capital gains and losses. Instead, a sole proprietor would typically report depletion on Schedule C (Form 1040), which is used for reporting income and expenses related to a business they operate.
The question asks whether depletion reported by a sole proprietor is reported on Schedule D. The answer is False. Schedule D is a form used for capital gains and losses from the sale of assets like stocks and real estate. Depletion is a tax deduction for the exhaustion of natural resources, which is reported on Schedule C for sole proprietors engaged in natural resource extraction.