26 U.S.C. § 272 — Disposal of coal or domestic iron ore

submitted 72 years ago by ch. 736 to r/title-26-INTERNAL-REVENUE-CODE · 121 words · no verdicts yet

in plain englishAI-generated · not legal advice

This tax law limits deductions for coal or iron ore sold under section 631 contracts. You can't deduct the costs of making and running the contract, or of protecting your economic interest in it, unless those costs plus your depletion basis exceed what the contract earned that year. The rule doesn't apply in a year with no income under the contract.

When coal or iron ore is disposed of under a contract covered by section 631, you normally cannot deduct the costs of making and administering that contract, or the costs of preserving the economic interest you keep under it. There is an exception. In any tax year where those expenditures, plus the adjusted depletion basis of the coal or iron ore disposed of that year, add up to more than the amount you were paid under the contract, that extra amount counts as a loss. You can deduct it under section 165(a) — but only the part of it you have not already used to reduce a gain under section 1231. This section does not apply at all in any tax year in which the contract produced no income.

the actual law source: uscode.house.gov ↗public domain

Where the disposal of coal or iron ore is covered by section 631, no deduction shall be allowed for expenditures attributable to the making and administering of the contract under which such disposition occurs and to the preservation of the economic interest retained under such contract, except that if in any taxable year such expenditures plus the adjusted depletion basis of the coal or iron ore disposed of in such taxable year exceed the amount realized under such contract, such excess, to the extent not availed of as a reduction of gain under section 1231, shall be a loss deductible under section 165(a). This section shall not apply to any taxable year during which there is no income under the contract.

Source credit: (Aug. 16, 1954, ch. 736, 68A Stat. 82; Pub. L. 88–272, title II, § 227(a)(3), (b)(3), Feb. 26, 1964, 78 Stat. 98.)

history & why it existsrecord from the source credit

1954Enacted · Act of Aug. 16, 1954, ch. 736
1964Amended · Pub. L. 88-272 · 78 Stat. 98

A history note hasn’t been published yet. The record shows enactment by ch. 736 on 1954-08-16.

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