Amortization of Corporate Mineral and Drilling Costs

§ 291. Special rules relating to corporate preference items(a) Reduction in certain preference items, etc.For purposes of this subtitle, in the case of a corporation—(1) Section 1250 capital gain treatmentIn the case of section 1250 property which is disposed of during the taxable year, 20 percent of the excess (if any) of—(A) the amount which would be treated as ordinary income if such property was section 1245 property, over (B) the amount treated as ordinary income under section 1250 (determined without regard to this paragraph), shall be treated as gain which is ordinary income under section 1250 and shall be recognized notwithstanding any other provision of this title. Under regulations prescribed by the Secretary, the provisions of this paragraph shall not apply to the disposition of any property to the extent section 1250(a) does not apply to such disposition by reason of section 1250(d). (2) Reduction in percentage depletionIn the case of iron ore and coal (including lignite), the amount allowable as a deduction under section 613 with respect to any property (as defined in section 614) shall be reduced by 20 percent of the amount of the excess (if any) of—(A) the amount of the deduction allowable under section 613 for the taxable year (determined without regard to this paragraph), over (B) the adjusted basis of the property at the close of the taxable year (determined without regard to the depletion deduction for the taxable year). (3) Certain financial institution preference itemsThe amount allowable as a deduction under this chapter (determined without regard to this section) with respect to any financial institution preference item shall be reduced by 20 percent. (4) Amortization of pollution control facilitiesIf an election is made under section 169 with respect to any certified pollution control facility, the amortizable basis of such facility for purposes of such section shall be reduced by 20 percent. (b) Special rules for treatment of intangible drilling costs and mineral exploration and development costsFor purposes of this subtitle, in the case of a corporation—(1) In generalThe amount allowable as a deduction for any taxable year (determined without regard to this section)—(A) under section 263(c) in the case of an integrated oil company, or (B) under section 616(a) or 617(a), shall be reduced by 30 percent. (2) Amortization of amounts not allowable as deductions under paragraph (1)The amount not allowable as a deduction under section 263(c), 616(a), or 617(a) (as the case may be) for any taxable year by reason of paragraph (1) shall be allowable as a deduction ratably over the 60-month period beginning with the month in which the costs are paid or incurred. (3) DispositionsFor purposes of section 1254, any deduction under paragraph (2) shall be treated as a deduction allowable under section 263(c), 616(a), or 617(a) (whichever is appropriate).