Page:United States Statutes at Large Volume 45 Part 1.djvu/872

 SEVENTIETH CONGRESS. SEss. I. Ca. 852. 1928. 821 or loss was not recognized. For the purposes of this paragraph INCOME TAX ' Perio d of a ffil iati on the term " period of affiliation " means the period during which determined. such corporations were affiliated (determined in accordance with the law applicable thereto) but does not include any taxable year beginning on or after January 1, 1922, unless a consolidated return was made, nor any taxable year after the Basis in subsequent taxable year 1928. The basis in case of property acquired by a years. corporation during any period, in the taxable year 1929 or any subsequent taxable year, in respect of which a consolidated return is made by such corporation under section 141 of this Act, shall be determined in accord ance with regulation s prescribed under section 141(b). Property acquired (b) Property acquired before March 1, 1913 .-The basis for before March 1, 1913. determining the gain or loss from the sale or other disposition of Gain or loss. property acquired before March 1, 1913, shall be (1) the cost of such property (or, in the case of such property Based on cost. a s is described in subsection (a) (1), (4), (5), or (12) of this section, the basis as therein provided), or (2) the fair market value of such property as of March 1, Fair market value. 1913, whichever is greater. In determining the fair market value of stock whichever greater. in a corporation as of March 1, 1913, due regard shall be given to the fair market value of the assets of the corporation as of that date. Basis for depreciation SEC. 114 . BASIS FOR DEP RECIATI ON AND DEPLET ION. and depletion. a) Basis for depreciation .-The basis upon which exhaustion, Depreciation . ( Same as upon sale, wear and tear, and obsolescence are to be allowed in respect of any et Anie, p.818. property shall be the same as is provided in section 113 for the purpose of determining the gain or loss upon the sale or other dispos ition of suc h prop erty. (b) Basis for depletion .- Depletion. (1) GENERAL RULE .-The basis upon which depletion is to be Allowance same as for sale, etc. allo wed in respe ct of any pr operty shall be the same as is pro- vided in section 113 for the purpose of determining the gain or loss upon the sale or other disposition of such property, except Exceptions. as provided in paragraphs (2) and (3) of this subsection. Mines discovered by (2) DiscoviRY VALUE IN CASE OF MINES.-In the case of mines tax pa yer after Fe b- discovered by the taxpayer after February 28, 1913, the basis market value. 913, fair for d epletion shall be the fair market v alue of t he proper ty at the date of discovery or within thirty days thereafter, if such mines were not acquired as the result of purchase of a proven tract or lease, and if the fair market value of the property is materially disproportionate to the cost. The depletion allowance based on allowance.

depletion discovery value provided in this paragraph shall not exceed 50 per centum of the net income of the taxpayer (computed without allowance for depletion) from the property upon which the dis- covery was made, except that in no case shall the depletion allow- ance be less than it would be if computed without reference to discovery value. Discoveries shall include minerals in commer- Miner als in cluded. cial quantities contained within a vein or deposit discovered in an existing mine or mining tract by the taxpayer after February 28, 1913, if the vein or deposit thus discovered was not merely the uninterrupted extension of a continuing commercial vein or deposit already known to exist, and if the discovered minerals are of sufficient value and quantity that they could be separately mined and marketed at a profit. (3) PERCENTAGE DEP LETION FOP OIL AND GAS WELLS .-In the Oilandgasallowance case of oil and gas wells the allowance for depletion shall be 271/ 2 per centum of the gross income from the property during the Maximum. taxable year. Such allowance shall not exceed 50 per centum of

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