U.S. Code » Title 26 » Subtitle Subtitle A— Income Taxes › Chapter CHAPTER 1— NORMAL TAXES AND SURTAXES › Subchapter Subchapter I— Natural Resources › Part PART I— DEDUCTIONS

26 U.S.C. § 611

Allowance of deduction for depletion

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(a) General rule

In the case of mines, oil and gas wells, other natural deposits, and timber, there shall be allowed as a deduction in computing taxable income a reasonable allowance for depletion and for depreciation of improvements, according to the peculiar conditions in each case; such reasonable allowance in all cases to be made under regulations prescribed by the Secretary. For purposes of this part, the term “mines” includes deposits of waste or residue, the extraction of ores or minerals from which is treated as mining under section 613(c). In any case in which it is ascertained as a result of operations or of development work that the recoverable units are greater or less than the prior estimate thereof, then such prior estimate (but not the basis for depletion) shall be revised and the allowance under this section for subsequent taxable years shall be based on such revised estimate.

(b) Special rules(1) Leases

In the case of a lease, the deduction under this section shall be equitably apportioned between the lessor and lessee.

(2) Life tenant and remainderman

In the case of property held by one person for life with remainder to another person, the deduction under this section shall be computed as if the life tenant were the absolute owner of the property and shall be allowed to the life tenant.

(3) Property held in trust

In the case of property held in trust, the deduction under this section shall be apportioned between the income beneficiaries and the trustee in accordance with the pertinent provisions of the instrument creating the trust, or, in the absence of such provisions, on the basis of the trust income allocable to each.

(4) Property held by estate

In the case of an estate, the deduction under this section shall be apportioned between the estate and the heirs, legatees, and devisees on the basis of the income of the estate allocable to each.

(c) Cross reference

For other rules applicable to depreciation of improvements, see section 167.

(Aug. 16, 1954, ch. 736, 68A Stat. 207; Pub. L. 85–866, title I, § 35, Sept. 2, 1958, 72 Stat. 1632; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)Editorial NotesAmendments

1976—Subsec. (a). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.

1958—Subsec. (d)(4). Pub. L. 85–866 substituted “devisees” for “devises”.

Statutory Notes and Related SubsidiariesEffective Date of 1958 Amendment

Amendment by Pub. L. 85–866 applicable to taxable years beginning after Dec. 31, 1953, and ending after Aug. 16, 1954, see section 1(c)(1) of Pub. L. 85–866, set out as a note under section 165 of this title.

Notes of Decisions
Cited in 62 cases, 1936–2014 · leading case: Comm'r v. Engle, 464 U.S. 206 (1984).
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Comm'r v. Engle, 464 U.S. 206 (1984). · cites it 3× “These consolidated cases present the question whether §§611-613A of the Internal Revenue Code (Code), 26 U. S. C. §§611 -613A, entitle taxpayers to an allowance for percentage depletion on lease bonus or advance royalty income received from lessees of their oil and gas mineral…”
United States v. Hill, 506 U.S. 546 (1993). · cites it 2× “An owner of such wasting assets, according to basic income tax theory, should accordingly be allowed a “reasonable allowance for depletion,” 26 U. S. C. § 611 (a) (1976 ed.), “to compensate [him] for the part exhausted in production, so that when the minerals are gone, the…”
Comm'r v. Portland Cement Co. of Utah, 450 U.S. 156 (1981). “This case concerns the depletion deduction taken under § 611 of the Internal Revenue Code of 1954, 26 U. S. C. § 611 , by a company that mines and manufactures Portland cement.”
Paragon Jewel Coal Co. v. Comm'r, 380 U.S. 624 (1965). · cites it 2× “1954, § 611, 26 U. S. C. § 611 (1958 ed.). [4] I. R. C.”
United States v. Swank, 451 U.S. 571 (1981). · cites it 2× “" 26 U. S. C. § 611 (a). "§ 613. Percentage depletion "(a) General Rule "In the case of the mines, wells, and other natural deposits listed in subsection (b), the allowance for depletion under section 611 shall be the percentage, specified in subsection (b), of the gross income…”
Curchin v. Missouri Indus. Dev. Bd., 722 S.W.2d 930 (Mo. 1987). · cites it 2× “ver neither appellant nor the majority advance the proposition that the "bad debt" and similar allowable deductions constitute prohibited "granting of public money" or "lending of public credit," yet to strike down the challenged credit necessarily threatens invalidation of the…”
Walter Bernard McCall & Marie S. McCall Sam G. McCall & Ruth W. McCall v. Comm'r of Internal Revenue, 312 F.2d 699 (4th Cir. 1963). · cites it 3× “674 (1962)) of deficiencies in income taxes for the year 1956, occasioned by the disallowance of a deduction for depletion, provided for by 26 U.S.C.A. § 611 and the regulations issued thereunder, in regard to coal mining carried on by the partners.”
Hugoton Prod. Co. v. The United States, 315 F.2d 868 (Ct. Cl. 1963). · cites it 2× “207-208, as amended, 26 U.S.C. §§ 611 , 613 (1958 ed.). 3 . “Sec.”
City of Charlottesville, Virginia v. Fed. Energy Regulatory Comm'n, 774 F.2d 1205 (D.C. Cir. 1985). “2d 1247 (1961), which ordered the Commission to require an integrated gas company to flow through to ratepayers tax savings resulting from depletion allowances, see 26 U.S.C. §§ 611 -613A, and the deduction of intangible drilling expenses, see 26 U.”
Weyerhaeuser Co. v. United States, 32 Fed. Cl. 80 (Fed. Cl. 1994). · cites it 2× “26 U.S.C. § 611 ; Treas.Reg. §§ 1.611-1, 1.”
Hay v. United States, 263 F. Supp. 813 (N.D. Tex. 1967). · cites it 3× “26 U.S.C.A. § 611 (b) (3). The government contends that the allocation as made was proper and in accordance with the provisions of Section 1.”
Winters Coal Co., Inc., Petitioner-Appellant-Cross v. Comm'r of Internal Revenue, Respondent-Appellee-Cross, 496 F.2d 995 (5th Cir. 1974). · cites it 2× “, had no economic interest in the coal in place, mined under a lease with Alabama By-Products Corporation, which would have entitled Winters to a deduction for percentage depletion under Sections 611 and 613 of the Internal Revenue Code, 26 U.S.C. § 611 and § 613? The answer…”
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