80 STAT. ]
PUBLIC LAW 8 9. 5 7 0 - S E P T. 12, 1966
763
SEC. 2. (a) Section 615 of the Internal Revenue Code of 1954 7 4ltf.'^333^^^' (relating to exploration expenditures) is amended by adding at the end thereof the following new subsections: " (e) ELECTION To HAVE SECTION APPLY.—This section (other than subsections (f) and (g)) shall apply only if the taxpayer so elects in such manner as the Secretary or his delegate may by regulations prescribe. Such election shall be made before the expiration of 3 years after the time prescribed by law (determined without any extension thereof) for filing the return for the first taxable year ending after the date of the enactment of this subsection in which expenditures described in subsection (a) are paid or incurred after such date. Such election may not be revoked after the expiration of such 3 years. "(f)
SECTION 615 AND SECTION 617 ELECTIONS To B E MUTUALLY
EXCLUSIVE.—A taxpayer who has made an election under subsection (e) (which he has not revoked) may not make an election under section 617(a). A taxpayer who has made an election under section 617 (a) (which he has not revoked) may not make an election under subsection (e) of this section. "(g)
EFFECT OF TRANSFER OF MINERAL PROPERTY.— "(1) TRANSFER BEFORE ELECTION.—If—
" (A) any person transfers any mineral property to another person in a transaction as a result of which the basis of such property in the hands of the transferee is determined by reference to the basis in the hands of the transferor, and " (B) the transferor has not, at the time of the transfer, made an election under either subsection (a) of section 617 or subsection (e) of this section, then no election by the transferor under either such subsection shall apply with respect to expenditures which are made by the transferor after the date of the enactment of this subsection and before the date of the transfer and which are properly chargeable to such property. For purposes of the preceding sentence, a transferor of mineral property who made an election under subsection (a) of section 617 or subsection (e) of.this section before the transfer but who revokes such election after the transfer shall be treated with respect to such property as not having made an election under either such subsection. "(2)
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EFFECT OF ELECTION BY TRANSFEREE UNDER SECTION 6IT.—
If— " (A) the taxpayer receives mineral property in a transaction described in paragraph (1)(A), " (B) an election made by the transferor under subsection (e) applies with respect to expenditures which are made by him after the date of the enactment of this subsection and before the date of the transfer and which are properly chargeable to such property, and " (C) the taxpayer has made or makes an election under section 617(a), then in applying section 617 with respect to the transferee, the amounts allowed as deductions under this section to the transferor, 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 deductions under section 617(a) to the transferor. Notwithstanding subsections (b) and (d) of this section (and section 381(c) (10)), any deferred expenses described in subsection (b) which are not allowed as deductions to the transferor for a period before the transfer may not be deducted by the transferee and in his hands shall be charged to capital account."
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