I.R.C. § 616(a) In General
Except as provided in subsections (b) and (d), there shall be allowed as a deduction
in computing taxable income all expenditures paid or incurred during the taxable
year for the development of a mine or other natural deposit (other than an oil or
gas well) if paid or incurred after the existence of ores or minerals in commercially
marketable quantities has been disclosed. 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,
I.R.C. § 616(b) Election Of Taxpayer
At the election of the taxpayer, made in accordance with regulations prescribed
by the Secretary, expenditures described in subsection (a) paid or incurred during
the taxable year shall be treated as deferred expenses and shall be deductible on
a ratable basis as the units of produced ores or minerals benefited by such expenditures
are sold. In the case of such expenditures paid or incurred during the development
stage of the mine or deposit, the election shall apply only with respect to the excess
of such expenditures during the taxable year over the net receipts during the taxable
year from the ores or minerals produced from such mine or deposit.
The election under this subsection, if made, must be for the total amount of such
expenditures, or the total amount of such excess, as the case may be, with respect
to the mine or deposit, and shall be binding for such taxable year.
I.R.C. § 616(c) Adjusted Basis Of Mine Or Deposit
The amount of expenditures which are treated under subsection (b) as deferred expenses
shall be taken into account in computing the adjusted basis of the mine or deposit,
except that such amount, and the adjustments to basis provided in section 1016(a)(9)
, shall be disregarded in determining the adjusted basis of the property for the
purpose of computing a deduction for depletion under section 611
I.R.C. § 616(d) Special Rules For Foreign Development
In the case of any expenditures paid or incurred with respect to the development
of a mine or other natural deposit (other than an oil, gas, or geothermal well) located
outside of the United States—
I.R.C. § 616(d)(2)
such expenditures shall—
I.R.C. § 616(d)(2)(A)
at the election of the taxpayer, be included in adjusted basis for purposes of computing
the amount of any deduction allowable under section 611
(without regard to section 613
I.R.C. § 616(d)(2)(B)
if subparagraph (A) does not apply, be allowed as a deduction ratably over the 10-taxable
year period beginning with the taxable year in which such expenditures were paid
I.R.C. § 616(e) Cross Reference
For election of 10-year amortization of expenditures allowable as a deduction under
subsection (a), see section 59(e)
(Aug. 16, 1954, ch. 736, 68A Stat. 212; Oct. 4, 1976,
Pub. L. 94-455, title XIX, 1906(b)(13)(A), 90 Stat. 1834; Sept. 3, 1982, Pub. L. 97-248, title II, 201(d)(9)(C), formerly 201(c)(9)(C), 96 Stat. 420, redesignated Jan. 12, 1983, Pub. L. 97-448, title III,
306(a)(1)(A)(i), 96 Stat. 2400; Oct. 22, 1986, Pub. L. 99-514, title IV, 411(b)(2)(A), (C)(i), 100 Stat. 2226; Nov. 10, 1988, Pub. L. 100-647, title I, 1007(g)(7), 102 Stat. 3435.)
1988--Subsec. (e). Pub. L. 100-647 substituted “section 59(e)” for “section 58(i)”.
1986--Subsec. (a). Pub. L. 99-514, 411(b)(2)(C)(i), inserted reference to subsec. (d).
Subsecs. (d), (e). Pub. L. 99-514, 411(b)(2)(A), added subsec. (d) and redesignated former subsec. (d) as (e).
1982--Subsec. (d). Pub. L. 97-248 added subsec. (d).
1976--Subsec. (b). Pub. L. 94-455 struck out “or his delegate” after “Secretary”.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable to costs paid or incurred after Dec. 31, 1986, in taxable years ending
after such date, with transition rule, see section 411(c) of Pub. L. 99-514 set out as a note under section 263 of this title.
EFFECTIVE DATE OF 1982 AMENDMENT
Amendment by Pub. L. 97-248 applicable to taxable years beginning after Dec. 31, 1982, see section 201(e)(1)
of Pub. L. 97-248, set out as a note under section 5 of this title.