[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: 26CFR1.615-7]

[Page 517]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.615-7  Effect of transfer of mineral property.

    (a) Transfer before election by transferor. (1) If mineral property 
is transferred in a transaction as a result of which the basis of the 
property in the hands of the transferee is determined in whole or in 
part by reference to the basis in the hands of the transferor and the 
transferor had not made an election under either section 615(e) or 
617(a) at the time of the transfer, no election made by the transferor 
after the transfer shall apply with respect to expenditures properly 
chargeable to the transferred property which were paid or incurred 
before the date of the transfer.
    (2) For purposes of subparagraph (1) of this paragraph, a transferor 
of mineral property who made an election under section 617(a) or section 
615(e) before the transfer but who revokes such election after such 
transfer and does not make an election under either section before the 
expiration of the 3-year period prescribed by section 6072 or other 
provision of law for filing his income tax return for the taxable year 
in which such transfer occurred shall be treated with respect to such 
property as not having made an election under either section.
    (b) Transfer after election by transferor. If a transferee who at 
the time of the transfer of a mineral property has not made an election 
under section 617(a) receives property in a transaction in which the 
basis of such property in his hands is determined in whole or in part by 
reference to its basis in the hands of the transferor and with respect 
to such property the transferor has deducted expenditures under section 
617(a), the adjusted exploration expenditures properly chargeable to the 
property immediately after the transfer shall be treated as expenditures 
allowed as deductions under section 617(a) to the transferee. See 
section 617 and the regulations thereunder.
    (c) Transfer after election by transferee. (1) If a transferee who 
makes an election under section 617(a) receives before January 1, 1970, 
mineral property in a transaction in which the basis of such property in 
his hands is determined in whole or in part by reference to the basis of 
the property in the hands of the transferor and the transferor had in 
effect at the time of the transfer an election under section 615(e), an 
amount equal to the total of the amounts allowed as deductions to the 
transferor under section 615 with respect to the transferred mineral 
property shall be treated as expenditures allowed as deductions under 
section 617(a) to the transferee. The preceding sentence shall not apply 
to expenditures which would not have been reflected in the basis of the 
property in the hands of the transferor had the transferor not made the 
section 615(e) election.
    (2) Any expenditures with respect to the transferred property 
deferred by the transferor under section 615(b) which are not allowed as 
deductions to him prior to transfer of the property may not be deducted 
by the transferee and in his hands shall be charged to capital account.

[T.D. 7192, 37 FR 12940, June 30, 1972]