§ 613. Percentage depletion

Editorial Notes

Amendments

2018—Subsec. (a). Pub. L. 115–141 substituted “any deduction under section 199A” for “the deduction under section 199A”.

2017—Subsec. (a). Pub. L. 115–97, § 13305(b)(4), struck out “and without the deduction under section 199” after “without allowance for depletion”.

Pub. L. 115–97, § 11011(d)(3), inserted “and without the deduction under section 199A” after “without the deduction under section 199”.

2005—Subsec. (c)(4)(H). Pub. L. 109–135 inserted “(including in situ retorting)” after “and retorting”.

2004—Subsec. (a). Pub. L. 108–357, which directed the insertion of “and without the deduction under section 199” after “without allowances for depletion”, was executed by making the insertion after “without allowance for depletion”, to reflect the probable intent of Congress.

1996—Subsec. (e)(1)(B). Pub. L. 104–188 substituted “subsection (b).” for “subsection (b),”.

1990—Subsec. (a). Pub. L. 101–508, § 11522(a), inserted “(100 percent in the case of oil and gas properties)” after “50 percent”.

Subsec. (e)(1)(B). Pub. L. 101–508, § 11815(b)(2), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “the applicable percentage (determined under the table contained in paragraph (2)) shall be deemed to be the percentage specified in subsection (b).”

Subsec. (e)(2) to (4). Pub. L. 101–508, § 11815(b)(1), redesignated pars. (3) and (4) as (2) and (3), respectively, and struck out former par. (2) which related to the applicable percentage depletion for geothermal deposits.

1986—Subsec. (e)(4). Pub. L. 99–514 added par. (4).

1978—Subsec. (c)(1). Pub. L. 95–618, § 403(a)(2)(A), inserted “and other than a geothermal deposit” after “oil or gas well”.

Subsec. (e). Pub. L. 95–618, § 403(a)(1), added subsec. (e).

1976—Subsec. (a). Pub. L. 94–455, § 1901(b)(3)(K), substituted “ordinary income” for “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231”.

Subsec. (c)(2), (4)(I). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

1975—Subsec. (b)(1). Pub. L. 94–12, § 501(b)(2)(A), struck out subpar. (A) “oil and gas wells” and redesignated former subpars. (B) and (C) as (A) and (B), respectively.

Subsec. (b)(3), (4). Pub. L. 94–12, § 501(b)(2)(B), substituted “(1)(B)” for “(1)(C)” wherever appearing.

Subsec. (b)(7). Pub. L. 94–12, § 501(b)(2) (B), (C), substituted “(1)(B)” for “(1)(C)” in provisions preceding subpar. (A) and added subpar. (C).

Subsec. (d). Pub. L. 94–12, § 501(b)(1), substituted provisions denying the percentage depletion allowance in the case of oil and gas wells except as provided in section 613A for provisions governing the application of percentage depletion rates to certain taxable years ending in 1954.

1974—Subsec. (c)(4)(E). Pub. L. 93–499 inserted reference to decarbonation of trona.

1969—Subsec. (b). Pub. L. 91–172, § 501(a), reduced the percentage depletion rate on oil and gas wells from 27½ percent to 22 percent, reduced to 22 percent other minerals formerly receiving percentage depletion at a rate of 23 percent, added molybdenum in the category of minerals subject to the 22 percent depletion rate, reduced to 14 percent the rate on minerals formerly receiving depletion at a 15 percent rate except in the case of domestic gold, silver, oil shale, copper, and iron ore, and inserted provision that for percentage depletion purposes, minerals other than sodium chloride, extracted from brine pumped from a saline perennial lake within the United States are not to be considered minerals from an inexhaustible source.

Subsec. (c)(4)(H), (I). Pub. L. 91–172, § 502(a), added subpar. (H) and redesignated former subpar. (H) as (I).

1966—Subsec. (b)(2)(B). Pub. L. 89–809, § 207(a)(1), inserted “clay, laterite, and nephelite syenite” after “anorthosite”.

Subsec. (b)(3)(B). Pub. L. 89–809, §§ 207(a)(2), 209(a)(2), substituted “if neither paragraph (2)(B), (5), or (6)(B) applies” for “if paragraph (5)(B) does not apply”.

Subsec. (b)(5). Pub. L. 89–809, § 209(a)(1), added par. (5). Former par. (5) redesignated (6).

Subsec. (b)(6). Pub. L. 89–809, §§ 208(a)(1), 209(a)(1), (3), (4), redesignated par. (5) as (6), struck out “mollusk shells (including clam shells and oyster shells),”, substituted “shale (except shale described in paragraph (5)), and stone (except stone described in paragraph (7))” for “shale, and stone, except stone described in paragraph (6)” in subpar. (A), and struck out “building or paving brick,” and “sewer pipe,” in subpar. (B). Former par. (6) redesignated (7).

Subsec. (b)(7). Pub. L. 89–809, §§ 208(a)(2), 209(a)(1), (5), redesignated par. (6) as (7) and inserted “mollusk shells (including clam shells and oyster shells),” after “marble,” and “(other than slate to which paragraph (5) applies)” after “any other such mineral”.

Subsec. (c)(4)(G). Pub. L. 89–809, § 209(b), substituted “paragraph (5) or (6)(B)” for “paragraph (5)(B)”.

1964—Subsec. (b)(2)(B), (6). Pub. L. 88–571 inserted “beryllium” after “antimony” in par. (2)(B), and deleted “beryl” after “bauxite” in pars. (2)(B) and (6).

1962—Subsec. (a). Pub. L. 87–834 inserted provisions requiring the allowable deductions taken into account with respect to expenses of mining in computing the taxable income from the property to be decreased by an amount equal to so much of any gain which is treated under section 1245 as gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231, and is properly allocable to the property.

1960—Subsec. (b)(3). Pub. L. 86–564, § 302(a)(1), limited the 15 percent allowance for ball clay, bentonite, china clay, and sagger clay to cases where paragraph (5)(B) does not apply, and authorized a 15 percent allowance, if paragraph (5)(B) does not apply, for clay used or sold for use for purposes dependent on its refractory properties.

Subsec. (b)(5). Pub. L. 86–564, § 302(a)(2), substituted provisions authorizing a 5 percent allowance for clay used, or sold for use, in the manufacture of building or paving brick, drainage and roofing tile, sewer pipe, flower pots, and kindred products for provisions which authorized a 5 percent allowance for brick and tile clay.

Subsec. (b)(6). Pub. L. 86–564, § 302(a)(3), struck out provisions which authorized a 15 percent allowance for refractory and fire clay. See subsec. (b)(3) of this section.

Subsec. (c)(2). Pub. L. 86–564, § 302(b)(1), substituted “the treatment processes considered as mining described in paragraph (4) (and the treatment processes necessary or incidental thereto)” for “the ordinary treatment processes normally applied by mine owners or operators in order to obtain the commercially marketable mineral product or products”, and “such treatment processes” for “the ordinary treatment processes”.

Subsec. (c)(4). Pub. L. 86–564, § 302(b)(2), substituted “The following treatment processes where applied by the mine owner or operator shall be considered as mining to the extent they are applied to the ore or mineral in respect of which he is entitled to a deduction for depletion under section 611” for “The term ‘ordinary treatment processes’ includes the following” in opening provisions, included cleaning in subpar. (B), substituted “ores or minerals which” for “minerals which” and included substantially equivalent processes in subpar. (C), included uranium and minerals which are not customarily sold in the form of the crude mineral product and substituted “from the ore or the mineral or minerals from other material from the mine or other natural deposit” for “from the ore, including the furnacing of quicksilver ores” in subpar. (D), included the furnacing of quicksilver ores in subpar. (E), and added subpars. (F) to (H).

Subsec. (c)(5). Pub. L. 86–564, § 302(b)(2), added par. (5).

1958—Subsec. (d). Pub. L. 85–866 added subsec. (d).

Statutory Notes and Related Subsidiaries

Effective Date of 2018 Amendment

Amendment by Pub. L. 115–141 effective as if included in section 11011 of Pub. L. 115–97, see section 101(d)(1) of Pub. L. 115–141, set out as a note under section 62 of this title.

Effective Date of 2017 Amendment

Amendment by section 11011(d)(3) of Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 11011(e) of Pub. L. 115–97, set out as a note under section 62 of this title.

Amendment by section 13305(b)(4) of Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, except as provided by transition rule, see section 13305(c) of Pub. L. 115–97, set out as a note under section 74 of this title.

Effective Date of 2004 Amendment

Amendment by Pub. L. 108–357 applicable to taxable years beginning after Dec. 31, 2004, see section 102(e) of Pub. L. 108–357, set out as a note under section 56 of this title.

Effective Date of 1990 Amendment

Pub. L. 101–508, title XI, § 11522(c), Nov. 5, 1990, 104 Stat. 1388–486, provided that: “The amendments made by this section [amending this section and sections 613A and 614 of this title] shall apply to taxable years beginning after December 31, 1990.”

Effective Date of 1986 Amendment

Pub. L. 99–514, title IV, § 412(a)(3), Oct. 22, 1986, 100 Stat. 2227, provided that: “The amendment made by this subsection [amending this section and section 613A of this title] shall apply to amounts received or accrued after August 16, 1986, in taxable years ending after such date.”

Effective Date of 1978 Amendment

Pub. L. 95–618, title IV, § 403(c), Nov. 9, 1978, 92 Stat. 3204, provided that: “The amendments made by this section [amending this section and sections 613A and 614 of this title] shall take effect on October 1, 1978, and shall apply to taxable years ending on or after such date.”

Effective Date of 1976 Amendment

Amendment by section 1901(b)(3)(K) of Pub. L. 94–455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title.

Effective Date of 1975 Amendment

Amendment by Pub. L. 94–12 effective Jan. 1, 1975, applicable to taxable years ending after Dec. 31, 1974, see section 501(c) of Pub. L. 94–12, set out as an Effective Note under section 613A of this title.

Effective Date of 1974 Amendment

Pub. L. 93–499, § 2(b), Oct. 29, 1974, 88 Stat. 1550, provided that: “The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 1970.”

Effective Date of 1969 Amendment

Pub. L. 91–172, title V, § 501(b), Dec. 30, 1969, 83 Stat. 630, provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after October 9, 1969.”

Pub. L. 91–172, title V, § 502(b), Dec. 30, 1969, 83 Stat. 630, provided that: “The amendments made by subsection (a) [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Dec. 30, 1969].”

Effective Date of 1966 Amendment

Pub. L. 89–809, title II, § 207(b), Nov. 13, 1966, 80 Stat. 1579, provided that: “The amendments made by subsection (a) [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Nov. 13, 1966].”

Pub. L. 89–809, title II, § 208(b), Nov. 13, 1966, 80 Stat. 1579, provided that: “The amendments made by subsection (a) [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Nov. 13, 1966].”

Pub. L. 89–809, title II, § 209(c), Nov. 13, 1966, 80 Stat. 1580, provided that: “The amendments made by subsections (a) and (b) [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Nov. 13, 1966].”

Effective Date of 1964 Amendment

Pub. L. 88–571, § 6(b), Sept. 2, 1964, 78 Stat. 860, provided that: “The amendments made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1963.”

Effective Date of 1962 Amendment

Amendment by Pub. L. 87–834 applicable to taxable years beginning after Dec. 31, 1962, see section 13(g) of Pub. L. 87–834, set out as an Effective Date note under section 1245 of this title.

Effective Date of 1960 Amendment

Pub. L. 86–564, title III, § 302(c), June 30, 1960, 74 Stat. 293, as amended by Pub. L. 86–781, § 4, Sept. 14, 1960, 74 Stat. 1018; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:

“(c) Effective Date.—

“(1) In general.— Except as provided in paragraph (2), the amendments made by subsections (a) and (b) [amending this section] shall be applicable only with respect to taxable years beginning after December 31, 1960.

“(2) Calcium carbonates, etc.—

“(A) Election for past years.— In the case of calcium carbonates or other minerals when used in making cement, if an election is made by the taxpayer under subparagraph (C)—

“(i) the amendments made by subsection (b) [amending this section] shall apply to taxable years with respect to which such election is effective and

“(ii) provisions having the same effect as the amendments made by subsection (b) [amending this section] shall be deemed to be included in the Internal Revenue Code of 1939 and shall apply to taxable years with respect to which such election is effective in lieu of the corresponding provisions of such Code.

“(B) Years to which applicable.— An election made under subparagraph (C) to have the provisions of this paragraph apply shall be effective for all taxable years beginning before January 1, 1961, in respect of which—

“(i) the assessment of a deficiency,

“(ii) the refund or credit of an overpayment, or

“(iii) the commencement of a suit for recovery of a refund under section 7405 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] [section 7405 of this title],

is not prevented on the date of the enactment of this paragraph [Sept. 14, 1960] by the operation of any law or rule of law. Such election shall also be effective for any taxable year beginning before January 1, 1961, in respect of which an assessment of a deficiency has been made but not collected on or before the date of the enactment of this paragraph.

“(C) Time and manner of election.— An election to have the provisions of this paragraph apply shall be made by the taxpayer on or before the 60th day after the date of publication in the Federal Register of final regulations issued under authority of subparagraph (F), and shall be made in such form and manner as the Secretary of the Treasury or his delegate shall prescribe by regulations. Such election, if made, may not be revoked.

“(D) Statutes of limitation.— Notwithstanding any other law, the period within which an assessment of a deficiency attributable to the application of the amendments made by subsection (b) [amending this section] may be made with respect to any taxable year to which such amendments apply under an election made under subparagraph (C), and the period within which a claim for refund or credit of an overpayment attributable to the application of such amendments may be made with respect to any such taxable year, shall not expire prior to one year after the last day for making an election under subparagraph (C). An election by a taxpayer under subparagraph (C) shall be considered as a consent to the application of the provisions of this subparagraph.

“(E) Terms; applicability of other laws.— Except where otherwise distinctly expressed or manifestly intended, terms used in this paragraph shall have the same meaning as when used in the Internal Revenue Code of 1986 [this title] (or corresponding provisions of the Internal Revenue Code of 1939) and all provisions of law shall apply with respect to this paragraph as if this paragraph were a part of such Code (or corresponding provisions of the Internal Revenue Code of 1939).

“(F) Regulations.— The Secretary of the Treasury or his delegate shall prescribe such regulations as may be necessary to carry out the provisions of this paragraph.”

Effective Date of 1958 Amendment

Amendment by Pub. L. 85–866 applicable to taxable years beginning after Dec. 31, 1953, and ending after Aug. 16, 1954, see section 1(c)(1) of Pub. L. 85–866, set out as a note under section 165 of this title.

Savings Provision

For provisions that nothing in amendment by section 11815(b)(1), (2) of Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title.

Election for Clay and Shale Used in Manufacture of Clay Products

Pub. L. 87–312, Sept. 26, 1961, 75 Stat. 674, provided for the election of, and procedure for, a differing rate of depletion for clay and shale used in the manufacture of clay products, such election to be effective for all taxable years beginning before Jan. 1, 1961, in respect of which the assessment of a deficiency, a refund or credit of overpayment, or the commencement of a suit for recovery is not prevented on Sept. 26, 1961, by operation of any law or rule of law, and also effective for any taxable year beginning before Jan. 1961, in respect of which an assessment of a deficiency has been made but not collected on or before Sept. 26, 1961.

Election for Quartzite and Clay Used in Production of Refractory Products

Pub. L. 87–321, § 2, Sept. 26, 1961, 75 Stat. 683, provided for an election of, and procedures for, a differing rate of depletion for quartzite and clay used in production of refractory products, such election to be effective on and after Jan. 1, 1951, for all taxable years beginning before Jan. 1, 1961, in respect of which the assessment of a deficiency, the refund or credit of an overpayment, or the commencement of a suit for recovery is not prevented on Sept. 26, 1961, by the operation of any law or rule of law, and also effective on and after Jan. 1, 1951, for any taxable year beginning before Jan. 1, 1961, in respect of which an assessment of a deficiency has been made but not collected on or before Sept. 26, 1961.

Refund or Credit of Overpayments; Limitations; Interest

Pub. L. 85–866, title I, § 36(b), Sept. 2, 1958, 72 Stat. 1633, provided for the filing of a claim within 6 months of Sept. 2, 1958, and for the refund or credit of any overpayment, without interest, if such refund or credit, resulting from the addition of subsec. (d) of this section, was prevented on Sept. 2, 1958, or within 6 months thereof, by the operation of any law or rule of law other than certain specified sections of the Internal Revenue Codes of 1939 and 1954.