Treasury Regulations · 26 CFR

§ 1.1016-4. Exhaustion, wear and tear, obsolescence, amortization, and depletion; periods during which income was not subject to tax.

In effect eCFR current as of October 15, 2026

Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).

Regulation under 26 U.S.C. § 1016

Cite as 26 CFR § 1.1016-4

At a glance

Read from the text and its source citation. Not part of the regulation.

Status: In the current eCFR
Issued: October 17, 1963 by T.D. 6681
Issued under: 26 U.S.C. § 1016
Length: 315 words · about 1 min to read
Cross-references: cites 1 Code section and 0 regulations; cited by 1

¶(a) Adjustments to basis must be made for exhaustion, wear and tear, obsolescence, amortization, and depletion to the extent actually sustained in respect of:

¶(1) Any period before March 1, 1913,

¶(2) Any period since February 28, 1913, during which the property was held by a person or organization not subject to income taxation under chapter 1 of the Code or prior income tax laws,

¶(3) Any period since February 28, 1913, and before January 1, 1958, during which the property was held by a person subject to tax under part I, subchapter L, chapter 1 of the Code, or prior income tax law, to the extent that section 1016(a)(2) does not apply, and

¶(4) Any period since February 28, 1913, during which such property was held by a person subject to tax under part II of subchapter L, chapter 1 of the Code, or prior income tax law, to the extent that section 1016(a)(2) does not apply.

¶(b) The amount of the adjustments described in paragraph (a) of this section actually sustained is that amount charged off on the books of the taxpayer where such amount is considered by the Commissioner to be reasonable. Otherwise, the amount actually sustained will be the amount that would have been allowable as a deduction:

¶(1) During the period described in paragraph (a) (1) or (2) of this section, had the taxpayer been subject to income tax during those periods, or

¶(2) During the period described in paragraph (a) (3) or (4) of this section, with respect to property held by a taxpayer described in that paragraph, to the extent that section 1016(a)(2) was inapplicable to such property during that period.

In the case of a taxpayer subject to the adjustment required by subparagraph (1) or (2) of this paragraph, depreciation shall be determined by using the straight line method.

[T.D. 6681, 28 FR 11131, Oct. 17, 1963]

Cross-references

Computed from the citations in the text of 26 CFR.

Code sections it cites

§ 1016 Adjustments to basis

Cited by 1 other regulation

§ 1.1016-3 Exhaustion, wear and tear, obsolescence, amortization, and depletion for periods since February 28, 1913.

Amendment history

From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.

October 17, 1963Issued by T.D. 6681 (28 FR 11131)

Where it sits in 26 CFR

Nearby sections

§ 1.1015-5 Increased basis for gift tax paid.
§ 1.1016-1 Adjustments to basis; scope of section.
§ 1.1016-2 Items properly chargeable to capital account.
§ 1.1016-3 Exhaustion, wear and tear, obsolescence, amortization, and depletion for periods since February 28, 1913.
§ 1.1016-4 Exhaustion, wear and tear, obsolescence, amortization, and depletion; periods during which income was not subject to tax.
§ 1.1016-5 Miscellaneous adjustments to basis.
§ 1.1016-6 Other applicable rules.
§ 1.1016-10 Substituted basis.
§ 1.1017-1 Basis reductions following a discharge of indebtedness.