Page:United States Statutes at Large Volume 80 Part 1.djvu/797

 80 STAT. 1

PUBLIC LAW 89-570-^SEPT. 12, 1966

761

to such property shall be treated as attributable to such portion to the extent of the amount of the gain to which paragraph (1) applies. " (B) I n the case of the disposition of an undivided interest in a mining property (or a portion thereof), a proportionate part of the adjusted exploration expenditures with respect to such property shall be treated as attributable to such undivided interest to the extent of the amount of the gain to which paragraph (1) applies. This paragraph shall not apply to any expenditure to the extent the taxpayer establishes to the satisfaction of the Secretary or his delegate that such expenditure relates neither to the portion (or interest therein) disposed of nor to any mine, in the property held by the taxpayer before the disposition, which has reached the producing stage. " (3) EXCEPTIONS AND LIMITATIONS.—Paragraphs (1), (2), and

(3) of section 1245(b) (relating to exceptions and limitations with respect to gain from disposition of certain depreciable property) shall.apply in respect of this subsection in the same manner and with the same effect as if references in section 1245(b) to section 1245 or any provision thereof were references to this subsection or the corresponding provisions of this subsection and as if references to section 1245 property were references to mining property. "(4) APPLICATION or SUBSECTION.—This subsection shall apply notwithstanding any other provision of this subtitle.

76 Stat. 1032.

" (e) BASIS or PROPERTY.—

"(1) BASIS.—The basis of any property shall not be reduced by the amount of any depletion which would be allowable but for the application of this section. "(2) ADJUSTMENTS.—The Secretary or his delegate shall prescribe such regulations as he may deem necessary to provide for adjustments to the basis of property to reflect gain recognized under subsection (d)(1). "(f) DEFINITIONS.—For purposes of this section— "(1) ADJUSTED EXPLORATION EXPENDITURES.—The tenn 'adjusted exploration expenditures' means, with respect to any property or mine— " (A) the amount of the expenditures allowed for the taxable year and all preceding taxable years as deductions under subsection (a) to the taxpayer or any other person which are properly chargeable to such property or mine and which (but for the election under subsection (a)) would be reflected in the adjusted basis of such property or mine, reduced by " (B) for the taxable year and for each preceding taxable year, the amount (if any) by which (i) the amount which would have been allowable for percentage depletion under section 613 but for the deduction of such expenditures, ^SA Stat. 208. exceeds (ii) the amount allowable for depletion under section 611, 68A Stat. 207. properly adjusted for any amounts included in gross income under subsection (b) or (c) and for any amounts of gain to which subsection (d) applied. "(2) M I N I N G PROPERTY.—The term 'mining property' means any property (within the meaning of section 614 after the appli- SSA Stat. 210; cation of subsections (c) and (e) thereof) with respect to which ''Stat. 1634. any expenditures allowed as a deduction under subsection (a)(1) are properly chargeable.

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