Page:United States Statutes at Large Volume 68A.djvu/251

 C H. 1—NORMAL TAXES AND SURTAXES

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permission is granted for any taxable year, the taxpayer shall treat such interests as one property for all subsequent taxable years unless the Secretary or his delegate consents to a different treatment. (2)

NONOPERATING MINERAL INTERESTS DEFINED.

For purpOSeS

of this subsection, the term "nonoperating mineral interests" includes only interests which are not operating mineral interests within the meaning of subsection (b)(3). SEC. 615. EXPLORATION EXPENDITURES. (a) IN GENERAL.—In the case of expenditures paid or incurred during the taxable year for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral, and paid or incurred before the beginning of the development stage of the mine or deposit, there shall be allowed as a deduction in computing taxable income so much of such expenditures as does not exceed $100,000. This section shall apply only with respect to the amount of such expenditures which, but for this section, would not be allowable as a deduction for the taxable year. This section shall not apply to expenditures for the acquisition or improvement of property of a character which is subject to the allowance for depreciation provided in section 167, but allowances for depreciation shall be considered, for purposes of this section, as expenditures paid or incurred. In no case shall this section apply with respect to amounts paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of oil or gas. (b) ELECTION OP TAXPAYER.—If the taxpayer elects, in accordance with regulations prescribed by the Secretary or his delegate, to treat as deferred expenses any portion of the amount deductible for the taxable year under subsection (a), such portion shall not be deductible in the manner provided in subsection (a) but shall be deductible on a ratable basis as the units of produced ores or minerals discovered or explored by reason of such expenditures are sold. An election made under this subsection for any taxable year shall be binding for such year. (c) LIMITATION.—This section shall not apply to any amount paid or incurred in any taxable year if in any 4 preceding years a deduction or election under this section, or the corresponding provision of prior laws, has been allowed to, or exercised by— (1) the taxpayer, or (2) the individual or corporation who has transferred to the taxpayer any mineral property. Paragraph (2) shall apply only if (A) the taxpayer was required to take into account under section 23 (ff)(3) of the Internal Revenue Code of 1939 the deduction allowed to or election exercised by such individual or corporation; (B) the taxpayer would be entitled under section 381(c) (10) to deduct expenses deferred under this section had the distributor or transferor corporation elected to defer such expenses; or (C) the taxpayer acquired any mineral property under circumstances which make section 334(b), 362 (a) and (b), 372 (a), 373 (b)(1), 723, 732, 1051, or 1082 apply to such transfer. (d) ADJUSTED B A S I S OF M I N E OR D E P O S I T. — The amount of expenditures which are treated under subsection (b) as deferred expenses § 615(d)

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