Introduction Depletion is the using up of natural resources by mining,quarrying, drilling, or felling. The depletion deduction allows anowner or operator to account for the reduction of a product'sreserves. There are two ways of figuring depletion: cost depletion andpercentage depletion. For mineral property, you generally must use themethod that gives you the larger deduction; for standing timber, youmust use cost depletion.