Internal Revenue Code · 26 U.S.C.
§ 616. Development expenditures
Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).
Cite as 26 U.S.C. § 616
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Enacted
- October 4, 1976 by Pub. L. 94–455
- Last amended
- November 10, 1988 by Pub. L. 100–647
- Amendments
- 4 dated changes in the source credit
- Length
- 5 subsections · 557 words · about 2 min to read
- Cross-references
- cites 5; cited by 7 Code sections and 7 other regulations
- Regulations
- 3 issued under this section
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, as expenditures.
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.
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.
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; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97–248, title II, § 201(d)(9)(C), formerly § 201(c)(9)(C), Sept. 3, 1982, 96 Stat. 420, renumbered § 201(d)(9)(C), Pub. L. 97–448, title III, § 306(a)(1)(A)(i), Jan. 12, 1983, 96 Stat. 2400; Pub. L. 99–514, title IV, § 411(b)(2)(A), (C)(i), Oct. 22, 1986, 100 Stat. 2226; Pub. L. 100–647, title I, § 1007(g)(7), Nov. 10, 1988, 102 Stat. 3435.)
Regulations under this section
Treasury regulations (26 CFR) issued under § 616
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 5 other sections
- § 167 Depreciation
- § 1016(a)(9) Adjustments to basis
- § 611 Allowance of deduction for depletion
- § 613 Percentage depletion
- § 59(e) Other definitions and special rules
Cited by 7 Code sections
- § 56(a)(2)(A) Adjustments in computing alternative minimum taxable income
- § 59(e)(2)(D) Other definitions and special rules
- § 263(a)(1)(A) Capital expenditures
- § 291(b)(1)(B) Special rules relating to corporate preference items
- § 312(n)(2)(B) Effect on earnings and profits
- § 381(c)(10) Carryovers in certain corporate acquisitions
- § 1016(a)(9) Adjustments to basis
Cited in 7 regulations not issued under it
- § 1.263(a)-6 Election to deduct or capitalize certain expenditures.
- § 1.270-1 Limitation on deductions allowable to individuals in certain cases.
- § 1.381(c)(10)-1 Deferred exploration and development expenditures.
- § 1.615-6 Election to deduct under section 615.
- § 1.936-10 Qualified investments.
- § 15.1-1 Elections to deduct.
- § 301.9100-7T Time and manner of making certain elections under the Tax Reform Act of 1986.
Amendment history
From the source credit and the official notes, newest first.
Where it sits in the Code
- Subtitle A Income Taxes
- Chapter 1 NORMAL TAXES AND SURTAXES
- Subchapter I Natural Resources
- Part I DEDUCTIONS
Nearby sections
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
Amendments
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”.
Statutory Notes and Related Subsidiaries
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.