26 U.S. Code § 614 - Definition of property
For the purpose of computing the depletion allowance in the case of mines, wells, and other natural deposits, the term “property” means each separate interest owned by the taxpayer in each mineral deposit in each separate tract or parcel of land.
Any election provided in paragraph (2) shall be made for each operating mineral interest, in the manner prescribed by the Secretary by regulations, not later than the time prescribed by law for filing the return (including extensions thereof) for the first taxable year in which any expenditure for development or operation in respect of such operating mineral interest is made by the taxpayer after the acquisition of such interest.
Except in the case of oil and gas wells and geothermal deposits, if a single tract or parcel of land contains a mineral deposit which is being extracted, or will be extracted by means of two or more mines for which expenditures for development or operation have been made by the taxpayer, then the taxpayer may elect to allocate to such mines, under regulations prescribed by the Secretary, all of the tract or parcel of land and of the mineral deposit contained therein, and to treat as a separate property that portion of the tract or parcel of land and of the mineral deposit so allocated to each mine. A separate property formed pursuant to an election under this paragraph shall be treated as a separate property for all purposes of this subtitle (including this paragraph). A separate property so formed may, under regulations prescribed by the Secretary, be included as a part of an aggregation in accordance with paragraphs (1) and (3). The election provided by this paragraph may not be made with respect to any property which is a part of an aggregation formed by the taxpayer under paragraph (1) except with the consent of the Secretary.
For purposes of this section, the term “operating mineral interest” includes only an interest in respect of which the costs of production of the mineral are required to be taken into account by the taxpayer for purposes of computing the taxable income limitation provided for in section 613, or would be so required if the mine, well, or other natural deposit were in the production stage.
If a taxpayer owns two or more separate nonoperating mineral interests in a single tract or parcel of land or in two or more adjacent tracts or parcels of land, the Secretary shall, on showing by the taxpayer that a principal purpose is not the avoidance of tax, permit the taxpayer to treat (for all purposes of this subtitle) all such mineral interests in each separate kind of mineral deposit as one property. If such permission is granted for any taxable year, the taxpayer shall treat such interests as one property for all subsequent taxable years unless the Secretary consents to a different treatment.
2014—Subsec. (b)(3)(C). Pub. L. 113–295, § 221(a)(65)(A), struck out subpar. (C) which related to a special rule for voluntary or compulsory unitization or pooling arrangements entered into in taxable years beginning before Jan. 1, 1964.
Subsec. (b)(4)(A). Pub. L. 113–295, § 221(a)(65)(B), which directed amendment of par. (4) by striking out “whichever of the following years is later: The first taxable year beginning after December 31, 1963, or”, was executed by striking out “whichever of the following taxable years is the later: The first taxable year beginning after December 31, 1963, or” before “the first taxable year” in subpar. (A), to reflect the probable intent of Congress.
Subsec. (b)(5). Pub. L. 113–295, § 221(a)(65)(A), struck out par. (5). Text read as follows: “If, on the day preceding the first day of the first taxable year beginning after December 31, 1963, the taxpayer has any operating mineral interests which he treats under subsection (d) of this section (as in effect before the amendments made by the Revenue Act of 1964), such treatment shall be continued and shall be deemed to have been adopted pursuant to paragraphs (1) and (2) of this subsection (as amended by such Act).”
1990—Subsec. (d). Pub. L. 101–508 substituted “taxable income” for “50 percent”.
1978—Subsec. (b). Pub. L. 95–618, § 403(a)(2)(C), inserted “or geothermal deposits” after “gas wells” in heading and introductory provisions.
Subsec. (c). Pub. L. 95–618, § 403(a)(2)(D), substituted “oil and gas wells and geothermal deposits” for “oil and gas wells” wherever appearing.
1976—Subsecs. (b)(3)(A), (4)(A), (e). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
Subsec. (c)(2). Pub. L. 94–455, §§ 1901(a)(87)(B), 1906(b)(13)(A), struck out “or his delegate” after “Secretary” wherever appearing and “, but the provisions of paragraph (4) shall not apply with respect to such separate property” after “in accordance with paragraphs (1) and (3)”.
Subsec. (c)(3). Pub. L. 94–455, § 1901(a)(87)(C), among other changes, struck out references to the first taxable year beginning after Dec. 31, 1957, and provisions relating to elections for taxable years beginning before Jan. 1, 1958, relating to election after final regulations, and relating to statute of limitations.
1964—Subsec. (b). Pub. L. 88–272, § 226(a), amended subsec. (b) generally, and among other changes, substituted provisions stating that except as otherwise provided, all of the taxpayer’s operating mineral interests in a separate tract or parcel of land will be combined and treated as one property, that the taxpayer may not combine any operating mineral interest in one tract or parcel of land with an operating mineral interest in another tract or parcel of land, that if he has more than one operating mineral interest in a single tract of land he may elect to treat one or more of such interests as separate properties, limited, however, to one combination of interests in a single tract of land, and providing, in the event the election in par. (2) is made with respect to any tract of land, for the treatment of interests discovered or acquired by the taxpayer in such a tract after the taxable year for which the election is made, for provisions which permitted a taxpayer who owned two or more separate operating mineral interests which constituted all or a part of an operating unit, to elect to form one aggregation and treat as one property any two or more of these interests, treating as separate properties any interests which he did not include in the one aggregation, to aggregate separate interests whether or not in a single tract of land, or contiguous tracts of land, and which forbade him to form more than one aggregation within a single operating unit, inserted provisions in par. (3) relating to unitization or pooling arrangements, and in par (5), providing that if the taxpayer has operating mineral interests on the day preceding the first day of the first taxable year beginning after Dec. 31, 1963, which he treats under subsec. (d) of this section as in effect before amendment by Pub. L. 88–272, he shall continue such treatment and it shall be deemed adopted pursuant to pars. (1) and (2) of this subsection, and struck out provisions defining “operating mineral interests”, and providing for termination of election with respect to mines, excepting oil and gas wells. For definition of “operating mineral interests”, see subsec. (d) of this section.
Subsec. (c). Pub. L. 88–272, § 226(b)(1), (2), struck out par. (5) which defined operating mineral interests, and “1958” before “Special rules” in heading.
Subsec. (d). Pub. L. 88–272, § 226(b)(3), amended subsec. (d) generally, substituting the definition of operating mineral interests, for provisions relating to the 1939 Code treatment respecting operating mineral interest in case of oil and gas wells.
Subsec. (e)(2). Pub. L. 88–272, § 226(b)(4), struck out “within the meaning of subsection (b)(3)” at end.
1958—Subsec. (b)(4). Pub. L. 85–866, § 37(a), added par. (4).
Subsecs. (c) to (e). Pub. L. 85–866, § 37(b)–(d), added subsecs. (c) and (d), redesignated former subsec. (c) as (e), and substituted in first sentence of par. (1) “or in two or more adjacent tracts” for “or in two or more contiguous tracts” and “shall, on showing by the taxpayer that a principal purpose is not the avoidance of tax, permit the taxpayer to treat (for all purposes of this subtitle) all such mineral interests in each separate kind of mineral deposit as one property” for “may, on showing of undue hardship, permit the taxpayer to treat (for all purposes of this subtitle) all such mineral interests as one property”.
Amendment by Pub. L. 95–618 effective Oct. 1, 1978, and applicable to taxable years ending on or after such date, see section 403(c) of Pub. L. 95–618, set out as a note under section 613 of this title.
Written determinations for this section
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