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TITLE 26-INTERNAL REVENUE CODE tures allowed as a deduction under subsection (a)(1) are properly chargeable. (3) Disposal of coal or domestic iron ore with a re- tained economic interest A transaction which constitutes a dLqposal of coal or iron ore under section 631(c) shall be treated as a dispositon. In such a case, the excess referred to in subsection (d)(1)(B) shall be treated as equal to the gain (if any) referred to in section 631(c). (g) Special rules relating to partnership property (1) Property distributed to partner In the case of any property or mine re- ceived by the taxpayer in a distribution with respect to part or all of his interest in a part- nership, the adjusted exploration expendi- tures with respect to such property or mine include the adjusted exploration expendi- tures (not otherwise included under subsec- tion (f)(1)) with respect to such property or mine immediately prior to such distribution, but the adjusted exploration expenditures with respect to any such property or mine shall be reduced by the amount of gain to which section 751(b) applied realized by the partnership (as constituted after the distribu- tion) on the distribution of such property or mine. (2) Property retained by partnership In the case of any property or mine held by a partnership after a distribution to a partner to which section 751(b) applied, the adjusted exploration expenditures with respect to such property or mine shall, under regulations pre- scribed by the Secretary, be reduced by the amount of gain to which section 751(b) ap- plied realized by such partner with respect to such distribution on account of such property or mine, (h) Limitation (1) In general Subsection (a) shall apply to any amount paid or incurred after December 31, 1969, with respect to any deposit of ore or other mineral located outside the United States, only to the extent that such amount, when added to the amounts which are or have been deducted under subsection (a) and section 615 (as in effect before the enactment of the Tax Reform Act of 1976), or the corresponding provisions of prior law, does not exceed $400,000. (2) Amounts taken into account For purposes of paragraph (1), there shall be taken into account amounts deducted and amounts treated as deferred expenses by- (A) the taxpayer, and (B) any individual or corporation who has transferred to the taxpayer any mineral property. (3) Application of paragraph (2)(B) Paragraph (2)(B) shall apply with respect to all amounts deducted before the latest such transfer from the individual or corpora- tion to the taxpayer. Paragraph (2)(B) shall apply only if- (A) the taxpayer acquired any mineral property from the individual or corporation under circumstances which make paragraph (7), (8), (11), (15), (17), (20), or (22) of sec- tion 113(a) of the Internal Revenue Code of 1939 apply to such transfer; or (B) the taxpayer acquired any mineral property from the individual or corporation under circumstances which make section 334(b), 362(a) and (b), 372(a), 374(b)(1), 1051, or 1082 apply to such transfer. (I) Certain pre-1970 exploration expenditures If- (1) the taxpayer receives mineral property in a transaction as a result of which the basis of such property in the hands of the transfer- ee is determined by reference to the basis in the hands of the transferor, (2) an election made by the transferor under subsection (e) of section 615(e) (as in effect before the enactment of the Tax Reform Act of 1976) applied with respect to expenditures which were made by him and which were properly chargeable to such prop- erty, and (3) the taxpayer has made or makes an elec- tion under subsection (a), then in the application of this section with re- spect to the transferee, the amounts allowed as deductions under such section 615 to the trans- feror, which (but for the transferor's election) would be reflected in the adjusted basis of such property in the hands of the transferee, shall be treated as expenditures allowed as deduc- tions under subsection (a) to the transferor. (Added Pub. L. 89-570, § 1(a), Sept. 12, 1966, 80 Stat. 759, and amended Pub. L. 91-172, title V, § 504(b), Dec. 30, 1969, 83 Stat. 632; Pub. L. 94- 455, title XIX, §§ 1901(a)(89), (b)(3)(K), (21)(C)- (E), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1779, 1793, 1797, 1834.) RsRm czs IN TxxT The Tax Reform Act of 1976, referred to in subsecs. (h)(1), and (i)(2), is Pub. L. 94-455, Oct. 4, 1976, 90 Stat. 1520, which was enacted Oct. 4, 1976. For com- plete classification of this Act to the Code, see Tables volume. Paragraph (7), (8), (11), (15), (17), (20), or (22) of sec- tion 113(a) of the Internal Revenue Code of 1939, re- ferred to in subsec. (h)(3), was classified to section 113 of former Title 26, Internal Revenue Code. Section 113 was repealed by section 7851(a)(1) of this title. For table of comparisons of the 1939 Code to the 1954 Code, see table I preceding section 1 of this title. See, also, section 7851(e) of this title for provision that ref- erences in the 1954 Code to a provision of the 1939 Code, not then applicable, shall be deemed a reference to the corresponding provision of the 1954 Code, which is then applicable. AMENmENTs 1976--Subsec. (a)(2)(A). Pub. L. 94455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". Subsec. (a)(2)(B). Pub. L. 94-455, §§ 1901(a)(89), 1906(b)(13)(A), substituted "may not be revoked unless" for "may not be revoked after the last day of the third month following the month in which the final regulations issued under the authority of this subsection are published in the Federal Register, unless", and struck out "or his delegate" following "Secretary". Subsec. (b)(2)(A). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". Subsec. (d)(1). Pub. L. 94-455, § 1901(b)(3)(K), substi- tuted "ordinary income" for "gain from the sale or ex- Lt617 Page 454