Final answer:
Depletion for a sole proprietor is reported on Schedule C as the business and the owner are not separate entities and this form is used for all business income and expenses.
Step-by-step explanation:
When considering whether depletion reported by a sole proprietor is reported on Schedule C, the answer is true. In a sole proprietorship, the business and the owner are not separate entities. This means that the proprietor is entitled to all profits, but also responsible for all the business's debts, liabilities, and tax obligations. Depletion is typically associated with the cost recovery of natural resources, and for sole proprietors who extract natural resources, these costs are indeed deductible and should be reported on Schedule C of their personal tax return. This form is where sole proprietors report income and expenses pertaining to their business, encompassing all relevant financial activity, including deductions for depletion.