Page 451

TITLE 26-INTERNAL REVENUE CODE which forbade him to form more than one aggregation within a single operating unit, inserted provisions in par. (3) relating to unitization or pooling arrange. ments, and in par (5), providing that if the taxpayer has operating mineral interests on the day preceding the first day of the first taxable year beginning after Dec. 31, 1963, which he treats under subsec. (d) of this section as in effect before amendment by Pub. L. 88- 272, he shall continue such treatment and it shall be deemed adopted pursuant to pars. (1) and (2) of this subsection, and eliminated provisions defining "oper- ating mineral interests", and providing for termina- tion of election with respect to mines, excepting oil and gas wells. For definition of "operating mineral in- terests". see subsec. (d) of this section. Subsec. (c). Pub. L. 88-272, § 226(b)(1), (2), eliminat- ed par. (5) which defined operating mineral interests, and "1958" which preceded "Special rules" in the sub- section catchline. Subsec. Cd). Pub. L. 88-272, § 226(b)(3), amended subsec. (d) generally by substituting the definition of operating mineral interests, for provisions relating to the 1939 Code treatment respecting operating mineral interest in case of oil and gas wells. Subsec. (e)(2). Pub. L. 88-272, § 226(b)(4), deleted "within the meaning of subsection (b)(3)" from the end of the sentence. 1958-Subsec. (b)(4). Pub. L. 85-866, § 37(a), added subsec. (b)(4). Subsec. Cc). Pub. L. 85-866, § 37(b), added subsec. c) and redesignated former subsec. Cc) as (e). Subsec. d). Pub. L. 85-866, § 37(c), added subsec. Cd). Subsec. (e). Pub. L. 85-866, § 37(b), (d), redesignated former subsec. Cc) as (e) and substituted in first sen- tence of par. (1) "or in two or more adjacent tracts" for "or in two or more contiguous tracts" and "shall, on showing by the taxpayer that a principal purpose is not the avoidance of tax, permit the taxpayer to treat (for all purposes of this subtitle) all such mineral in- terests in each separate kind of mineral deposit as one property" for "may, on showing of undue hardship, permit the taxpayer to treat (for all purposes of this subtitle) all such mineral interests as one property". EFrIvE DATE OF 1976 AMENDMENT Section 1901(a)(87)(A)(ii) of Pub. L. 94-455 provided that: "The amendment made by clause (i) [repealing subsec. (c)(4) of this section] shall apply with respect to elections to form aggregations of operating mineral interests made under section 614(c)(1) of the Internal Revenue Code of 1954 [subsec. (c)(1) of this title] for taxable years beginning after December 31, 1.976." ErmzcivE DATE OF 1964 AMmN mNT Section 226(d) of Pub. L. 88-272 provided that: "The amendments made by subsections (a) and (b) [to this section] shall apply to taxable years beginning after December 31, 1963." E cTivzE DATE OF 1958 AtmxaNrT Section 37(e) of Pub. L. 85-866 provided that: "The amendments made by subsections (a) and Cc) [adding subsers. (b)(4) and (d) of this section] shall apply with respect to taxable years beginning after December 31, 1953, and ending after August 16, 1954. The amend- ments made by subsection (b) [to subsecs. Cc) and (e) of this section] shall apply with respect to taxable years beginning after December 31, 1957, oxcept that such amendments shall, at the election of the taxpay- er made in conformity with such amendments, apply with respect :u taxable years beginning after Decem- ber 31, 1953, and ending after August 16, 1954. The amendment made by subsection Cd) [to subsecs. (e)(1) of this sectionl shall apply with respect to taxable years beginning after December 31, 1957, except that with respect to any taxpayer such amendment shall, at the election of the taxpayer, apply with respect to taxable years beginning after December 31, 1953, and ending after August 16, 1954." ALLOCATION OF BASIS IN CERTAIN CASES Section 226(c) of Pub. L. 88-272 provided that: "For purposes of the Internal Revenue Code of 1954- "(1) Fair market value rule.-Except as provided in paragraph (2), if a taxpayer has a section 614(b) ag- gregation, then the adjusted basis (as of the first day of the first taxable year beginning after Decem- ber 31, 1963) of each property included in such ag- gregation shall be determined by multiplying the ad- justed basis of the aggregation by a fraction- "CA) the numerator of which is the fair mtrket value of such property, and "(B) the denominator of which is the fair market value of such aggregation. For purposes of this paragraph, the adjusted basis and the fair market value of the aggregation, and the fair market value of each property included therein, shall be determined as of the day preceding the first day of the first taxable year which begins after December 31, 1963. "(2) Allocation of adJustmemts, etc.-If the taxpay- er makes an election under this paragraph with re- spect to any section 614(b) aggregation, then the ad- justed basis (as of the first day of the first taxable year beginning December 31, 1963) of each property included in such aggregation shall be the adjusted basis of such property at the time it was first includ- ed in the aggregation by the taxpayer, adjusted for that portion of those adjustments to the basis of the aggregation which are reasonably attributable to such property. If, under the preceding sentence, the total of the adjusted bases of the interests included in the aggregation exceeds the adjusted basis of the aggregation (as of the day preceding the first day of the first taxable year which begins after December 31, 1963), the adjusted bases of the properties which include such interests shall be adjusted, under regu- lations prescribed by the Secretary of the Treasury or his delegate, so that the total of the adjusted bases of such interests equals the adjusted basis of the aggregation. An election under this paragraph shall be made at such time and in such manner as the Secretary of the Treasury or his delegate shall by regulations prescribe. "C3) Definitions. For purposes of this subsection- "CA) Section 614(b) aggregation.- "The term 'secticn 614(b) aggregation' means any aggregation to which section 614(b)(1)(A) of the Internal Revenue Code of 1954 [subsec. (b)(1)(A) of this section] (as in effect before the amendments made by subsection (a) of this sec- tion) applied for the day preceding the first day of the first taxable year beginning after December 31, 1963. "(B) Property. "The term 'property' has the same meaning as is applicable, under section 614 of the Internal Rev- enue Code of 1954 [this sectlonl, to the taxpayer for the first taxable year beginning after Decem- ber 31, 1963." SECTION REFEMED TO IN OTHER SEC£IONS This section is referred to in sections 57, 465, 617, 636, 1016 of this title. [§615. Repealed. Pub. L. 94-455, title XIX, § 1901(a)(88), Oct. 4, 1976, 90 Stat. 1779] Section, acts Aug. 16, 1954, ch. 736, 68A Stat. 211: July 6, 1960, Pub. L. 86-594, § 1, 74 Stat. 333; Sept. 12, 1966, Pub. L. 89-570, § 2(a), 80 Stat. 703; Dec. 30, 1969, Pub. L. 91-172, title V, § 504(a), 83 Stat. 632, related to pre-1970 exploration expenditures. ErIvE DATE OF RF.EAL Repeal of section effective with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 2 of this title. Page 451 § 816