[Code of Federal Regulations]
[Title 26, Volume 7]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.612-2]

[Page 405]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.612-2  Allowable capital additions in case of mines.

    (a) In general. Expenditures for improvements and for replacements, 
not including expenditures for ordinary and necessary maintenance and 
repairs, shall ordinarily be charged to capital account recoverable 
through depreciation deductions. Expenditures for equipment (including 
its installation and housing) and for replacements thereof, which are 
necessary to maintain the normal output solely because of the recession 
of the working faces of the mine and which:
    (1) Do not increase the value of the mine, or
    (2) Do not decrease the cost of production of mineral units, or
    (3) Do not represent an amount expended in restoring property or in 
making good the exhaustion thereof for which an allowance is or has been 
made shall be deducted as ordinary and necessary business expenses.
    (b) Special rule. For special provisions applicable to treatment of 
expenditures for certain exploration and development costs (other than 
for the acquisition, restoration, or betterment of improvements) with 
respect to minerals other than oil or gas, see sections 615 and 616 and 
the regulations thereunder.