OAR 150-317-0450: Depletion of Metal Mines

In the case of metal mines, a taxpayer may compute its depletion allowance based on the cost of the property, as provided in ORS 317.374(2), or by using percentage depletion. For purposes of this section, metal mines include those mines where the metal being extracted occurs in a pure state, such as gold or silver, or where it is found in combination with other substances, such as in the case of aluminum obtained from bauxite. The percentage depletion allowance is equal to 15 percent of the gross income from the property during the tax year, but shall not in any case exceed 50 percent of the net income of the taxpayer (computed without allowance for depletion) from the property. In its first return made under the tax law, the taxpayer must state, as to each property with respect to which it has any item of income or deduction (in case of metal mines), whether it elects to have the depletion allowance for each such property for the tax year computed with or without reference to percentage depletion. An election once exercised under this paragraph cannot thereafter be changed by the taxpayer, and the depletion allowance in respect to each such property will for all succeeding tax years be computed in accordance with the election so made.