Origin: Due to Massachusetts' reliance on the Internal Revenue Code (Code) for purposes of determining income, taxpayers in extractive industries such as mining or drilling for natural resources may deduct a percentage of gross mining income as a depletion allowance ("percentage depletion") without regard to their cost basis in the income producing property and may continue to claim the depletion allowance even after the cost of the property has been reduced to zero. This method of cost recovery is often more beneficial to taxpayers than the traditional cost recovery method applicable to natural resource property. For a more detailed description of this tax expenditure, see corporate excise item 2.204.
Origin: IRC §§ 611 and 613A; M.G.L. c. 62, § 2(d)(1)
Personal Income Tax
Deductions from Gross Income
1.203
Excess Natural Resource Depletion Allowance
Due to Massachusetts' reliance on the Internal Revenue Code (Code) for purposes of determining income, taxpayers in extractive industries such as mining or drilling for natural resources may deduct a percentage of gross mining income as a depletion allowance ("percentage depletion") without regard to their cost basis in the income producing property and may continue to claim the depletion allowance even after the cost of the property has been reduced to zero. This method of cost recovery is often more beneficial to taxpayers than the traditional cost recovery method applicable to natural resource property. For a more detailed description of this tax expenditure, see corporate excise item <a href="/tax-expenditure-budget/corporate-excise-tax/deductions-from-gross-income/2-204">2.204</a>.
IRC §§ <a href="https://www.law.cornell.edu/uscode/text/26/611" target="_blank">611</a> and <a href="https://www.law.cornell.edu/uscode/text/26/613A" target="_blank">613A</a>; M.G.L. <a href="https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter62/Section2" target="_blank">c. 62, § 2(d)(1)</a>
0.4
0.4
0.4
0.4
0.4
