# 26 U.S.C. § 611: Allowance of deduction for depletion Source: OLRC release point 119-134 . Cite pinpoints as 26 U.S.C. § 611(a)(1). ## § 611(a) General rule In the case of mines, oil and gas wells, other natural deposits, and timber, there shall be allowed as a deduction in computing taxable income a reasonable allowance for depletion and for depreciation of improvements, according to the peculiar conditions in each case; such reasonable allowance in all cases to be made under regulations prescribed by the Secretary. For purposes of this part, the term “mines” includes deposits of waste or residue, the extraction of ores or minerals from which is treated as mining under section 613(c). In any case in which it is ascertained as a result of operations or of development work that the recoverable units are greater or less than the prior estimate thereof, then such prior estimate (but not the basis for depletion) shall be revised and the allowance under this section for subsequent taxable years shall be based on such revised estimate. ## § 611(b) Special rules **§ 611(b)(1) Leases.** In the case of a lease, the deduction under this section shall be equitably apportioned between the lessor and lessee. **§ 611(b)(2) Life tenant and remainderman.** In the case of property held by one person for life with remainder to another person, the deduction under this section shall be computed as if the life tenant were the absolute owner of the property and shall be allowed to the life tenant. **§ 611(b)(3) Property held in trust.** In the case of property held in trust, the deduction under this section shall be apportioned between the income beneficiaries and the trustee in accordance with the pertinent provisions of the instrument creating the trust, or, in the absence of such provisions, on the basis of the trust income allocable to each. **§ 611(b)(4) Property held by estate.** In the case of an estate, the deduction under this section shall be apportioned between the estate and the heirs, legatees, and devisees on the basis of the income of the estate allocable to each. ## § 611(c) Cross reference For other rules applicable to depreciation of improvements, see section 167. ## Regulations - [Treas. Reg. § 1.611-0](/26/reg/1.611-0.md): Regulatory authority. (interprets § 611) - [Treas. Reg. § 1.611-1](/26/reg/1.611-1.md): Allowance of deduction for depletion. (interprets § 611) - [Treas. Reg. § 1.611-2](/26/reg/1.611-2.md): Rules applicable to mines, oil and gas wells, and other natural deposits. (interprets § 611) - [Treas. Reg. § 1.611-3](/26/reg/1.611-3.md): Rules applicable to timber. (interprets § 611) - [Treas. Reg. § 1.611-4](/26/reg/1.611-4.md): Depletion as a factor in computing earnings and profits for dividend purposes. (interprets § 611) - [Treas. Reg. § 1.611-5](/26/reg/1.611-5.md): Depreciation of improvements. (interprets § 611) ## Final rules - [68 FR 4918](https://www.federalregister.gov/documents/2003/01/31/03-2063/guidance-necessary-to-facilitate-electronic-tax-administration) (2003): Guidance Necessary To Facilitate Electronic Tax Administration - [67 FR 20028](https://www.federalregister.gov/documents/2002/04/24/02-9819/guidance-necessary-to-facilitate-electronic-tax-administration) (2002): Guidance Necessary To Facilitate Electronic Tax Administration ## Leading cases - [Paragon Jewel Coal Co. v. Commissioner, 380 U.S. 624 (1965)](https://www.courtlistener.com/opinion/107039/paragon-jewel-coal-co-v-commissioner/) - [Commissioner v. Portland Cement Co. of Utah, 450 U.S. 156 (1981)](https://www.courtlistener.com/opinion/110421/commissioner-v-portland-cement-co-of-utah/) - [RLC Industries Co. v. Commissioner, 58 F.3d 413 (9th Cir. 1995)](https://www.courtlistener.com/opinion/698429/rlc-industries-co-and-subsidiaries-successor-to-roseburg-lumber-co-and/) ## Connections Cites: § 167 Depreciation; § 613 Percentage depletion Cited by: § 57 Items of tax preference; § 62 Adjusted gross income defined; § 167 Depreciation; § 174 Amortization of research and experimental expenditures; § 174A Domestic research or experimental expenditures; § 263 Capital expenditures; § 291 Special rules relating to corporate preference items; § 613 Percentage depletion; § 613A Limitations on percentage depletion in case of oil and gas wells; § 616 Development expenditures; § 617 Deduction and recapture of certain mining exploration expenditures; § 691 Recipients of income in respect of decedents; § 703 Partnership computations; § 832 Insurance company taxable income; § 834 Determination of taxable investment income; § 901 Taxes of foreign countries and of possessions of United States; § 1254 Gain from disposition of interest in oil, gas, geothermal, or other mineral properties; § 4940 Excise tax based on investment income; § 7704 Certain publicly traded partnerships treated as corporations Derived from: 1939 § 23(m) ## Amendments - 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 207 - 1958-09-02: [Pub. L. 85-866](/26/act/85-866.md), 72 Stat. 1632 - 1976-10-04: [Pub. L. 94-455](/26/act/94-455.md), 90 Stat. 1834