Legal Definitions - depletion allowance

A depletion allowance is a tax deduction given to the owners of natural resources such as oil, gas, minerals, or timber. The deduction corresponds to the reduced value of the property resulting from the removal of the resource.

For example, if a company owns an oil well and extracts oil from it, the value of the well decreases over time. The depletion allowance allows the company to deduct a portion of this decrease in value from their taxable income.

Another example of an allowance is a family allowance. This is a portion of a decedent's estate set aside by law for a surviving spouse, children, or parents, regardless of any testamentarydisposition or competing claims. The allowance may be limited for a fixed period or may continue until all contests are resolved and a decree of distribution is entered.

Overall, an allowance is a share or portion of something that is assigned or granted, whether it be money, property, or services.