Title 26 — Internal Revenue CodeRelease 119-73not60
§272 Disposal of Coal or Domestic Iron Ore
Title 26 › Subtitle Subtitle A— Income Taxes › Chapter 1— NORMAL TAXES AND SURTAXES › Subchapter B— Computation of Taxable Income › Part IX— ITEMS NOT DEDUCTIBLE › § 272
Summary
Under section 631, costs to make or run a coal or iron ore contract and to preserve retained interest are not deductible. If those costs plus adjusted depletion in any year exceed contract receipts, the excess, unless used to reduce section 1231 gain, is deductible under section 165(a).
Full Legal Text
Title 26, §272
Internal Revenue Code — Source: USLM XML via OLRC
Where the disposal of coal or iron ore is covered by section 631, no deduction shall be allowed for expenditures attributable to the making and administering of the contract under which such disposition occurs and to the preservation of the economic interest retained under such contract, except that if in any taxable year such expenditures plus the adjusted depletion basis of the coal or iron ore disposed of in such taxable year exceed the amount realized under such contract, such excess, to the extent not availed of as a reduction of gain under section 1231, shall be a loss deductible under section 165(a). This section shall not apply to any taxable year during which there is no income under the contract.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
1964—Pub. L. 88–272 inserted “or domestic iron ore” in section catchline, and “or iron ore” wherever appearing in text.
Statutory Notes and Related Subsidiaries
Effective Date
of 1964 Amendment Pub. L. 88–272, title II, § 227(c), Feb. 26, 1964, 78 Stat. 98, provided that: “The
Amendments
made by this section [amending this section and section 631, 1016, 1231, and 1402 and section 411 of Title 42, The Public Health and Welfare] shall apply with respect to amounts received or accrued in taxable years beginning after December 31, 1963, attributable to iron ore mined in such taxable years.”
Reference
Citations & Metadata
Citation
26 U.S.C. § 272
Title 26 — Internal Revenue Code
Last Updated
Apr 5, 2026
Release point: 119-73not60