56 STAT.] 77TH CONG. , 2D SESS.-CH. 619-OCT. 21 , 1942 905 (c) NONTAXABLE INcoME. - Subchapter E of Chapter 2 is amended 54 Stat.975. 26U.S.C. 710- by inserting after section 734 the following new section: 752; Supp. I, § 710- 743. "SEC. 735. NONTAXABLE INCOME FROM CERTAIN MINING AND TIM- 921 BER OPERATIONS. "(a) DEFINITIONS.- For the purposes of this section, section 711 Ante, p . 904 . (a) (1) (I),and section 711 (a) (2) (K)- "(1) PRODUCER. -T he term 'producer' means a corporation which extracts minerals from a mineral property, or cuts logs from a timber block, in which an economic interest is owned by such corporation. "(2) MINERAL UNIT. -T he term 'mineral unit' means a unit of metal, coal, or nonmetallic substance in the minerals recovered from the operation of a mineral property. "(3) TIMBER NNrr.- T he term 'timber unit' means a unit of timber recovered from the operation of a timber block. "(4) EXCESS OUTPtT.- The term 'excess output' means the excess of the mineral units or the timber units for the taxable year over the normal output. "(5) NORMAL OUTPUT. -T he term 'normal output' means the average annual mineral units, or the average annual timber units, as the case may be, recovered in the taxable years beginning after December 31, 1935, and not beginning after December 31, 1939 (hereinafter called 'base period'), of the person owning the min- "Base period." eral property or the timber block (whether or not the taxpayer). The average annual mineral units or timber units shall be com- puted by dividing the aggregate of such mineral units or timber units for the base period by the number of months for which the mineral property or the timber block was in operation during the base period and by multiplying the amount so ascertained by twelve. In any case in which the taxpayer establishes, under regulations prescribed by the Commissioner with the approval of the Secretary, that the operation of any mineral property or any timber block is normally prevented for a specified period each year by physical events outside the control of the taxpayer, the number of months during which such mineral property or timber block is regularly in operation during a taxable year shall be used in computing the average annual mineral units, or timber units, instead of twelve. Any mineral property, or any timber block, which was in operation for less than six months during the base period shall, for the purposes of this section, be deemed not to have been in operation during the base period. "(6) MINERAL PROPERTY. -The term 'mineral property' means a mineral deposit, the development and plant necessary for the extraction of the deposit, and so much of the surface of the land as is necessary for purposes of such extraction. "(7) MINERALS. -The term 'minerals' means ores of the metals, coal, and such nonmetallic substances as abrasives, asbestos, asphaltum, barytes, borax, building stone, cement rock, clay, crushed stone, feldspar, fluorspar, fuller's earth, graphite, gravel, gypsum, limestone, magnesite, marl, mica, mineral pigments, peat, potash, precious stones, refractories, rock phosphate, salt, sand, silica, slate, soapstone, soda, sulphur, and talc. "(8) TIMBER BLOCK. -The term 'timber block' means an opera- tion unit existing as of December 31, 1941, which includes all the taxpayer's timber which would logically go to a single given point of manufacture, but shall not include any operation unit acquired after December 31, 1941.
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