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TITLE 26-INTERNAL REVENUE CODE would have been allowable under section 613(a) for all of the taxpayers I natural gas produced from such property during the taxable year (computed as if section 613 ap- plied to all of such production at the rate specified in paragraph (5) or (6), as the case may be) as the amount of his depletable natural gas quantity in cubic feet bears to the aggregate number of cubic feet repre- senting the average daily production of do- mestic natural gas of the taxpayer for such year. (C) Taxable income from the property If both oil and gas are produced from the property during the taxable year, for pur- poses of subparagraphs (A) and (B) the tax- able income from the property, in applying the 50-percent limitation in section 613(a), shall be allocated between the oil produc- tion and the gas production in proportion to the gross income during the taxable year from each. (D) Partnerships In the case of a partnership, the depletion allowance shall be computed separately by the partners and not by the partnership. The partnership shall allocate to each part- ner his proportionate share of the adjusted basis of each partnership oil or gas proper- ty. The allocation is to be made as of the later of the date of acquisition of the oil or gas property by the partnership, or January 1, 1975. A partner's proportionate share of the adjusted basis of partnership property shall be determined in accordance with his interest in partnership capital or income and, in the case of an agreement described in section 704(c)(2) (relating to effect of a partnership agreement on contributed prop- erty), such share shall be determined by taking such agreement into account. Each partner shall separately keep records of his share of the adjusted basis in each oil and gas property of the partnership, adjust such share of the adjusted basis for any deple- tion taken on such property, and use such adjusted basis each year in the computation of his cost depletion or in the computation of his gain or loss on the disposition of such property by the partnership. For purposes of section 732 (relating to basis of distribut- ed property other than money), the part- nership's adjusted basis in mineral property shall be an amount equal to the sum of the partners' adjusted basis in such property as determined under this paragraph. (M) Secondary or tertiary production If the taxpayer has production from sec- ondary or tertiary recovery processes during the taxable year, this paragraph (under regulations prescribed by the Secre- tary) shall be applied separately with re- spect to such production. (8) Business under common control; members of the same family (A) Component members of controlled group treated as one taxpayer For purposes of this subsection, persons who are memnbers of the same controlled 'So in original. Probably should be "taxpayer's". group of corporations shall be treated as one taxpayer. (B) Aggregation of business entities under common control If 50 percent or more of the beneficial in- terest in two or more corporations, trusts, or estates is owned by the same or related persons (taking into account only persons who own at least 5 percent of such benefi- cial interest), the tentative quantity deter- mined under the table in paragraph (3)(B) shall be allocated among all such entities in proportion to the respective production of domestic crude oil during the period in question by such entities. (C) Allocation among members of the same family In the case of individuals who are mem- bers of the same family, the tentative quan- tity determined under the table in para- graph (3)(B) shall be allocated among such individuals in proportion to the respective production of domestic crude oil during the period in question by such individuals. (D) lefiniton andi special rules For purposes of this paragraph- (i) the term "controlled group of corpo- rations" has the meaning given to such term by section 1563(a), except that sec- tion 1563(b)(2) shall not apply and except that "more than 50 percent." shall be sub- stituted for "at least 80 peicent" each place it appears in section 1563(a), (i) a person is a related person to an- other person if such persons are members of the same controlled group of corpora- tions or if the relationship between such persons would result in a disallowance of losses under section 267 or 707(b), except that for this purpose the family of an in- dividual includes only his spouse and minor children. (ili) the family of an individual includes only his spouse and minor children, and (iv) each 6,000 cubic feet of domestic natural gas shall be treated as 1 barrel of domestic crude oil. (9) Transfer of oil or gas property (A) in the case of a transfer (including the subleasing of a lease) after December 31, 1974 of an interest (including an interest in a partnership or trust) in any proven oil or gas property, paragraph (1) shall not apply to the transferee (or subleasee) with respect to production of crude oil or natural gas at- tributable to such interest, and such pro- duction shall not be taken Into account for any computation by the transferee (or sublessee) under this subsection. A property shall be treated as a proven oil or gas prop- erty if at the time of the transfer the prin- cipal value of the property has been demon- strated by prospecting or exploration or dis- covery work. (B) Subparagraph (A) shall not apply in the case of- (i) a transfer of property at death, or § 613A Page 446