Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 66-51

1966-1 C.B. 158

Sec. 613

IRS Headnote

A 15-percent depletion rate is allowable under section 613 of the Internal Revenue Code of 1954 for quartz sand and quartz pebbles used or sold by the mineowner or operator for use for sand blasting, filtration, or for foundry purposes.

Full Text

Rev. Rul. 66-51

Advice has been requested whether the 5-percent or the 15-percent depletion rate is allowable under section 613 of the Internal Revenue Code of 1954 for quartz sand and quartz pebbles used or sold by the mineowner or operator for use for sand blasting, filtration, or for foundry purposes.

Section 613(a) of the Code provides that for the mines and other natural deposits named in section 613(b), the allowance for depletion under section 611 shall be a percentage (specified in section 613(b) of the Code) of the `gross income from the property' excluding rents and royalties paid by the taxpayer in respect to the property.

Quartz sand and quartz pebbles are listed in section 1.613-2(b)(4) of the Income Tax Regulations as examples of `all other minerals'. Section 1.613-2(b)(4) of the regulations provides a 15-percent rate for `all other minerals' (all minerals not specifically named under one of the other rate provisions for percentage depletion) unless the mineral is used or sold for use as rip rap, ballast, road material, rubble, concrete aggregates, or for similar purposes. If such mineral (`all other minerals') is, however, used for rip rap, ballast, road material, rubble, concrete aggregates, or for similar purposes, the 5-percent rate is applicable unless the mineral is sold by the mineowner or operator on a bid in direct competition with a bona fide bid to sell a mineral listed under section 613(b)(3) of the Code (in which case the 15-percent rate applies).

Quartz sand and quartz pebbles are not used as rip rap, ballast, road material, rubble, concrete aggregates, or for similar purposes, when used for sand blasting, filtration, or for foundry purposes.

Accordingly, a 15-percent depletion rate is allowable under section 613 of the Code for quartz sand and quartz pebbles used or sold by the mineowner or operator for use for sand blasting, filtration, or for foundry purposes.