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TITLE 26-INTERNAL REVENUE CODE est which thereafter becomes a part of such mine shall be included in such aggregation. (2) Election to treat a single interest as more than one property Except in the case of oil and gas wells, if a single tract or parcel of land contains a min- eral deposit which is being extracted, or will be extracted by means of two or more mines for which expenditures for development or operation have been made by the taxpayer, then the taxpayer may elect to allocate to such mines, under regulations prescribed by the Secretary, all of the tract or parcel of land and of the mineral deposit contained therein, and to treat as a separate property that portion of the tract or parcel of land and of the mineral deposit so allocated to each mine. A separate property formed pursuant to an election under this paragraph shall be treated as a separate property for all pur- poses of this subtitle (including this para- graph). A separate property so formed may, under regulations prescribed by the Secre- tary, be included as a part of an aggregation in accordance with paragraphs (1) and (3). The election provided by this paragraph may not be made with respect to any property which is a part of an aggregation forned by the taxpayer under paragraph (1) except with the consent of the Secretary. (3) Manner and scope of election The elections provided by paragraphs (1) and (2) shall be made, in accordance with reg- ulations prescribed by the Secretary, not later than the time prescribed for filing the return (including extensions thereof) for the first taxable year- (A) in which, in the case of an election under paragraph (1), any expenditure for development or operation in respect of the separate operating mineral interest is made by the taxpayer after the acquisition of such interest, or (B) in which, in the case of an election under paragraph (2), expenditures for de- velopment or operation of more than one mine in respect of a property are made by the taxpayer after the acquisition of the property. An election made under paragraph (1) or (2) for a taxable year shall be binding upon the taxpayer for such year and all subsequent taxable years, except that the Secretary may consent to a different treatment of any inter- est with respect to which an election has been made. (d) Operating mineral interests defined For purposes of this section, the term "oper- ating mineral interest" includes only an inter- est in respect of which the costs of production of the mineral are required to be taken into ac- count by the taxpayer for purposes of comput- ing the 50 percent limitation provided for in section 613, or would be so required if the mine, well, or other natural deposit were in the pro- duction stage. (e) Special rule as to nonoperating mineral interests (I) Aggregation of separate interests If a taxpayer owns two or more separate nonoperating mineral interests in a single tract or parcel of land or in two or more adja- cent tracts or parcels of land, the Secretary shall, on showing by the taxpayer that a prin- cipal purpose is not the avoidance of tax, permit the taxpayer to treat (for all purposes of this subtitle) all such mineral interests in each separate kind of mineral deposit as one property. If such permission is granted for any taxable year, the taxpayer shall treat such interests as one property for all subse- quent taxable years unless the Secretary con- sents to a different treatment. (2) Nonoperating mineral interests defined For purposes of this subsection, the term "nonoperating mineral interests" includes only interests which are not operating miner- al interests, (Aug. 16, 1954, ch. 736, 68A Stat. 210; Sept. 2, 1958, Pub. L. 85-866, title I, § 37(a)-(d), 72 Stat. 1633-1637; Feb. 26, 1964, Pub. L. 88-272, title II, § 226(a), (b), 78 Stat. 94, 96; Oct. 4, 1976, Pub. L. 94-455, title XIX, §§ 1901(a)(87)(A)(i), (B), (C), 1906(b)(13)(A), 90 Stat. 1779, 1834.) REznmcms IN TEXT The Revenue Act of 1964, referred to in subsec. (b)(5), is Pub. L. 88-272, Feb. 26, 1964, 78 Stat. 19. For complete classification of this Act to the Code, see Short Title note set out under section 1 of this title and Tables volume. AMENDmENTS 1976-Subsecs. (b)(3)(A), (4)(A), (e). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". Subsec. (c)(2). Pub. L. 94-455, §§ 1901(a)(87)(B). 1i6(b)(13)(A), struck out "or his delegate" following ' Secretary" wherever appearing and ", but the provi- sions of paragraph (4) shall not apply with respect to such separate property" following "in accordance with paragraphs (1) and (3)". Subsec. (c)(3). Pub. L. 94-455, § 1901(a)(87)(C), among other changes, struck out references to the first taxable year beginning after Dec. 31, 1957, and provisions relating to elections for taxable years begin- ning before Jan. 1, 1958, relating to election after final regulations, and relating to statute of limitations. Subsec. (c)(4). Pub. L. 94-455, § 1901(a)(87)(A)(i), struck out subsec. (c)(4) which related to a special rule as to deductions under section 615(a) of this title prior to aggregation. 1964-Subsec. (b). Pub. L. 88-272, § 226(a), amended subsec. (b) generally, and among other changes, sub- stituted provisions stacing that except as otherwise provided, all of the taxpayer's operating mineral inter- ests in a separate tract or parcel of land will be com- bined and treated as one property, that the taxpayer may not combine any operating mineral interest in one tract or parcel of land with an operating mineral interest in another tract or parcel of land, that if he has more than one operating mineral interest in a single tract of land he may elect to treat one or more of such interests as separate properties, limited, how- ever, to one combination of interests in a single tract of land, and providing, in the event the election in par. (2) is made with respect to any tract of land, for the treatment of interests discovered or acquired by the taxpayer in such a tract after the taxable year for which the election is made, for provisions which per- mitted a taxpayer who owned two or more separate operating mineral interests which constituted all or a part of an operating unit, to elect to form one aggrega- tion and treat as one property any two or more of these interests, treating as separate properties any in- terests which he did not include in the one aggrega- tion, to aggregate separate interests whether or not in a single tract of land, or contiguous tracts of land, and Page 450 § 614