The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1918-02-21

equals the capital originally invested,
or in case of purchase prior to March
/, 1913, the fair market value as of
that date of the mineral Sin place"
no further allowance on this account
shall be made
Ownership of the mine content at
the time for which computation is
made is an essential prerequisite to
an allowance deduction for depletion.
The deduction in the case ora lessee
will be limited to an amount equal to
the capital actually invested in the
lease, without regard to value as of
March /, 1913, or any other date.
The paragraphs of the title above
referred to authorize in the case OF
mine owners two classes of deductions
to take care of the wasting of as
sets, namely (a) depreciation, (b) de-
pletion.
Deductions and Valuation.
Art 172. If the property was ac-
CURED by purchase or otherwise (other
than by lease) prior to March |, 1913,
the amount of invested capital which
may be extinguished through annual
depletion deductions from gross in
come will be the fair market value
of the mine property SO acquired. as
OF March /. 1913 The value contem-
plated herein as the basis for depletion
deductions authorized by this title
must not be based upon the assumed
salable value of the output under cur
rent operative conditions, less cost of
production, for the reason that the
value so determined would compre
bend the profits to be realized from
opera ton of the property.
Neither must the value determined
as of March /, 1918, be speculative,
but must be determined upon the
basis of the salable value en- block
as of that date of the entire deposit
of minerals contained in the property
owned exclusive of the improvements
and development work; that is, the
price at which the natural deposits OF
mineral property as an entirety in its
then condition could have been dis
posed of for cash or it's equivalent
The en- block value having been thus
ascertained, an estimate of the number
of units (tons, pounds, etc.) should be
made. The en- bloc value divided By
the estimated number of units in the
property will determine the per uni
value, or amount of capital applicable
to each unit, which, multiplied by the
number of units mined and sold during
any one year, will determine the sun
which will constitute an allowable de.
duction from the gross income of thai
year on account of depletion.
Deduction computed on a like basis
may be made from year to year dur,
ing the ownership under which the
value was determined, until the ag.
gregate en- bloc value as of March l
1913, of the mine or mineral deposits
shall have been extinguished, aftel
which no further deduction on ac.
count of depletion with respect to this
property will be allowed to the indy.
idual or corporation under whose own.
ership the en- bloc value was deter.
mined.
Fair Market Value March I, 1918.
The precise detailed manner il
which the estimated fair market value
of mineral deposits as of March 1
1918, shall be made must naturally be
determined by each individual or cor
poration interested and who is the
owner thereof, upon such basis as
must not comprehend any operating
profits, the estimate in all cases to be
subject to the approval of the COM
missioner of internal revenue.
| In any case in which a corporation
uses for purposes of it's income return
an estimate of the value of mines OF
Of mineral lands or properties as of
March /, 1913, as the basis of comput-
ing amounts to be deducted for de-
pletion or return of capital, this de-
partment in passing upon the accuracy
and fairness of such estimate will at
tach due weight to. the market value
of the stock of the corporation on
March /. 1913, and also to sworn state
ments as to the value of capital stock
of the corporation filed at any time
thereafter for purposes of the special
excise tax on corporations based on
value of their capital stocks imposed
by title ~ of the act of September s,
1916.
In any case in which any depletion
deduction is computed on the basis
of the cost or price at which any mine,
mineral lands or properties were ac-
CURED, the corporation will be re-
CURED upon request of the
commissioner of internal revenue
to show that the cost or price at which
the property was bought was fixed for
purposes of bona flde purchase or
sale by which the property passed to
an owner in fact as well as In form,
different from the vendor. No ficti-
tious or inflated cost or price will be
permitted to form. the basis Of any
calculation of a depletion deduction,
and in determining whether or not the
price or cost at which any purchase