72 S T A T. ]
PUBLIC LAW 8 5 - 8 6 6 - S E P T. 2, 1958
sentence. If the tax so recomputed for any taxable year or years, by reason of the application of this paragraph, exceeds the tax liability previously determined for such year or years, such excess shall be taken into account in the first taxable year to which the election to aggregate under paragraph (1) applies and succeeding taxable years as provided in subparagraph (C). " (C) INCREASE I N TAX.—The tax imposed by this chapter for the first taxable year to which the election to aggregate under paragraph (1) applies, and for each succeeding taxable year until the full amount of the excess described in subparagraph (B) has been taken into account, shall be increased by an amount equal to the quotient obtained by dividing such excess by the total number of taxable years described in subparagraph (A) in respect of which— "(i) exploration expenditures were deducted by the taxpayer under section 615(a), and "(ii) the recomputation of tax described in the first sentence of subparagraph (B) results in an increase in tax or a reduction of a net operating loss. If the taxpayer dies or ceases to exist, then so much of the excess described in subparagraph (B) as was not taken into account under the preceding sentence for taxable years preceding such death, or such cessation of existence, shall be taken into account for the taxable year in which such death, or such cessation of existence, occurs. " (D) BASIS ADJUSTMENT.—If the tax liability of a taxpayer is increased by reason of the application of this paragraph, proper adjustments shall be made with respect to the basis of the aggregated property owned by such taxpayer, in accordance with regulations prescribed by the Secretary or his delegate, as though the tax liability of the taxpayer for the prior taxable year or years had been determined in accordance with the recomputation of tax described in subparagraph (B). "(5) OPERATING MINERAL INTERESTS DEFINED.—For purposes of this subsection, the term 'operating mineral interest' has the meaning as assigned to it by subsection (b)(3)". (c) RETENTION OF 1939 CODE RIGHTS W I T H RESPECT TO TREATMENT OF MINERAL INTERESTS I N WELLS.—Section 614 is further amended by
adding after subsection (c) (as added by subsection (b) of this section) the following new subsection: " (d) 1939 CODE TREATMENT W I T H RESPECT TO OPERATING MINERAL INTERESTS IN CASE OF O I L AND GAS W E L L S. — I n the case of oil and gas
wells, any taxpayer may treat any property (determined as if the Internal Revenue Code of 1939 continued to apply) as if subsections (a) and (b) had not been enacted. If any such treatment would constitute an aggregation under subsection (b), such treatment shall be taken into account in applying subsection (b) to other property of the taxpayer." (d) NONOPERATING MINERAL INTERESTS.—The first sentence of section 614(e)(1) (as redesignated by subsection (b) of this section) is amended to read as follows: "If a taxpayer owns two or more separate nonoperating mineral interests in a single tract or parcel of land or in two or more adjacent tracts or parcels of land, the Secretary or his delegate 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 interests in each separate kind of mineral deposit as one property."
1637
26 USC sis.
26 USC eu.
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