Page:United States Statutes at Large Volume 80 Part 1.djvu/796

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PUBLIC LAW 89.570-SEPT. 12, 1966

[80 STAT.

made; and such deficiency may be assessed at any time before the expiration of such 2-year period, notwithstanding- any law or rule of law which would otherwise prevent such assessment. " (b) RECAPTURE ON REACHING PRODUCING STAGE.—

68A Stat. 207.

"(1) RECAPTURE,—If, in any taxable year, any mine with respect to which expenditures were deducted pursuant to subsection (a) reaches the producing stage, then— " (A) If the taxpayer so elects with respect to all such mines reaching the producing stage during the taxable year, he shall include in gross income for the taxable year an amount equal to the adjusted exploration expenditures with respect to such mines, and the amount so included in income shall be treated for purposes of this subtitle as expenditures which (i) are paid or incurred on the respective dates on which the mines reach the producing stage, and (ii) are properly chargeable to capital account. " (B) If subparagraph (A) does not apply with respect to any such mine, then the deduction for depletion under section 611 wdtli respect to the property shall be disallowed until the amount of depletion which would be allowable but for this subparagraph equals the amount of the adjusted exploration expenditures with respect to such mine. "(2)

ELECTIONS.—

" (A) METHOD.—Any election under this subsection shall be made in such manner as the Secretary or his delegate may by regulations prescribe. " (B) T I M E AND SCOPE.—The election provided by paragraph (1) for any taxable year may be made or changed not later than the time prescribed by law for filing the return (including extensions thereof) for such taxable year. "(c) RECAPTURE IN CASE or BONUS OR ROYALTY.—If an election has been made under subsection (a) with respect to expenditures relating to a mining property and the taxpayer receives or accrues a bonus or a royalty with respect to such property, then the deduction for depletion under section 611 with respect to the bonus or royalty shall be disallowed until the amount of depletion which would be allowable but for this subsection equals the amount of the adjusted exploration expenditures with respect to the property to which the bonus or royalty relates. " (d) G A I N FROM DISPOSITIONS OF CERTAIN MINING PROPERTY.— "(1) GENERAL RULE.—Except as otherwise provided in this sub-

68A Stat. 325.

section, if mining property is disposed of the lower of— " (A) the adjusted exploration expenditures with respect to such property, or " (B) the excess of— " (i) the amount realized (in the case of a sale, exchange, or involuntary conversion), or the fair market value (in the case of any other disposition), over "(ii) the adjusted basis of such property, shall be treated as gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231. Such gain shall be recognized notwithstanding any other provision of this subtitle. " (2) DISPOSITION OF PORTION or PROPERTY.—For purposes of

paragraph (1) — " (A) I n the case of the disposition of a portion of a mining property (other than an undivided interest), the entire amount of the adjusted exploration expenditures with respect

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