§ 1.613-1 Percentage depletion; general rule.

(a) In general. In the case of a taxpayer computing the deduction for depletion under section 611 with respect to minerals on the basis of a percentage of gross income from the property, as defined in section 613(c) and §§ 1.613-3 and 1.613-4, the deduction shall be the percentage of the gross income as specified in section 613(b) and § 1.613-2. The deduction shall not exceed 50 percent (100 percent in the case of oil and gas properties for taxable years beginning after December 31, 1990) of the taxpayer's taxable income from the property (computed without regard to the allowance for depletion). The taxable income shall be computed in accordance with § 1.613-5. In no case shall the deduction for depletion computed under this section be less than the deduction computed upon the cost or other basis of the property provided in section 612 and the regulations thereunder. The apportionment of the deduction between the several owners of economic interests in a mineral deposit will be made as provided in paragraph (c) of § 1.611-1. For rules with respect to “gross income from the property” and for definition of the term “mining,” see §§ 1.613-3 and 1.613-4. For definitions of the terms “property,” “mineral deposit,” and “minerals,” see paragraph (d) of § 1.611-1. (b) Denial of percentage depletion in case of oil and gas wells. Except as otherwise provided in section 613A and the regulations thereunder, in the case of oil or gas which is produced after December 31, 1974, and to which gross income is attributable after that date, the allowance for depletion shall be computed without regard to section 613.