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Title 26 — Internal Revenue CodeRelease 119-73

§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

Last updated Apr 6, 2026|Official source

Summary

When coal or domestic iron ore is sold under the special capital-gain treatment of section 631, you cannot deduct the costs of making and administering the sale contract or of preserving your retained economic interest. But if in a year those costs plus the adjusted depletion basis of the coal or ore sold exceed what you received under the contract, the excess can be taken as a deductible loss to the extent it was not already used to reduce gain. None of this applies in a year with no income under the contract.

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 6, 2026

Release point: 119-73