[Code of Federal Regulations]
[Title 26, Volume 4]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.381(c)(18)-1]

[Page 431]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.381(c)(18)-1  Depletion on extraction of ores or minerals from 
the waste or residue of prior mining.

    (a) Carryover requirement. Section 381(c)(18) provides that the 
acquiring corporation in a transaction described in section 381(a) shall 
be considered as though it were the distributor or transferor 
corporation after the date of distribution or transfer for the purpose 
of determining the applicability of section 613(c)(3) (relating to 
extraction of ores or minerals from the ground). Thus, an acquiring 
corporation which has acquired the waste or residue of prior mining from 
a distributor or transferor corporation in a transaction described in 
section 381(a) shall be entitled, after the date of distribution or 
transfer, to an allowance for depletion under section 611 in respect of 
ores or minerals extracted from such waste or residue if the distributor 
or transferor corporation would have been entitled to such an allowance 
for depletion in the absence of the distribution or transfer. See 
paragraph (f) of Sec. 1.613-4 to determine whether a distributor or 
transferor corporation is entitled to an allowance for depletion with 
respect to the waste or residue of prior mining.
    (b) Application of section 614 to waste or residue of prior mining. 
If, in a transaction described in section 381(a), the acquiring 
corporation acquires waste or residue of prior mining from a distributor 
or transferor corporation, then the acquiring corporation shall be 
considered as though it were the distributor or transferor corporation 
for the purpose of applying section 614 and the regulations thereunder 
to the waste or residue so acquired. Thus, if the distributor or 
transferor corporation was required under paragraph (c) of Sec. 1.614-1 
to treat the waste or residue as part of the mineral deposit from which 
it was extracted and if the acquiring corporation acquires both the 
waste or residue and the mineral deposit from which it was extracted in 
a transaction described in section 381(a), then such waste or residue 
shall be treated as a part of such mineral deposit in the hands of the 
acquiring corporation. On the other hand, if the waste or residue was 
required to be treated as a separate mineral deposit in the hands of the 
distributor or transferor corporation, such waste or residue shall be 
treated as a separate mineral deposit in the hands of the acquiring 
corporation.

[T.D. 6552, 26 FR 1991, Mar. 8, 1961, as amended by T.D. 7170, 37 FR 
5373, Mar. 15, 1972]