26 U.S.C. § 468 — Special rules for mining and solid waste reclamation and closing costs

**(a) Establishment of reserves for reclamation and closing costs** (1) **Allowance of deduction** — If a taxpayer elects the application of this section with respect to any mining or solid waste disposal property, the amount of any deduction for qualified reclamation or closing costs for any taxable year to which such election applies shall be equal to the current reclamation or closing costs allocable to— (A) in the case of qualified reclamation costs, the portion of the reserve property which was disturbed during such taxable year, and (B) in the case of qualified closing costs, the production from the reserve property during such taxable year. (2) **Opening balance and adjustments to reserve** (A) *Opening balance* — The opening balance of any reserve for its first taxable year shall be zero. (B) *Increase for interest* — A reserve shall be increased each taxable year by an amount equal to the amount of interest which would have been earned during such taxable year on the opening balance of such reserve for such taxable year if such interest were computed— (i) at the Federal short-term rate or rates (determined under section 1274) in effect, and (ii) by compounding semiannually. (C) *Reserve to be charged for amounts paid* — Any amount paid by the taxpayer during any taxable year for qualified reclamation or closing costs allocable to portions of the reserve property for which the election under paragraph (1) was in effect shall be charged to the appropriate reserve as of the close of the taxable year. (D) *Reserve increased by amount deducted* — A reserve shall be increased each taxable year by the amount allowable as a deduction under paragraph (1) for such taxable year which is allocable to such reserve. (3) **Allowance of deduction for excess amounts paid** — There shall be allowed as a deduction for any taxable year the excess of— (A) the amounts described in paragraph (2)(C) paid during such taxable year, over (B) the closing balance of the reserve for such taxable year (determined without regard to paragraph (2)(C)). (4) **Limitation on balance as of the close of any taxable year** (A) *Reclamation reserves* — In the case of any reserve for qualified reclamation costs, there shall be included in gross income for any taxable year an amount equal to the excess of— (i) the closing balance of the reserve for such taxable year, over (ii) the current reclamation costs of the taxpayer for all portions of the reserve property disturbed during any taxable year to which the election under paragraph (1) applies. (B) *Closing costs reserves* — In the case of any reserve for qualified closing costs, there shall be included in gross income for any taxable year an amount equal to the excess of— (i) the closing balance of the reserve for such taxable year, over (ii) the current closing cost of the taxpayer with respect to the reserve property, determined as if all production with respect to the reserve property for any taxable year to which the election under paragraph (1) applies had occurred in such taxable year. (C) *Order of application* — This paragraph shall be applied after all adjustments to the reserve have been made for the taxable year. (5) **Income inclusions on completion or disposition** — Proper inclusion in income shall be made upon— (A) the revocation of an election under paragraph (1), or (B) completion of the closing, or disposition of any portion, of a reserve property. **(b) Allocation for property where election not in effect for all taxable years** If the election under subsection (a)(1) is not in effect for 1 or more taxable years in which the reserved property is disturbed (or production occurs), items with respect to the reserve property shall be allocated to the reserve in such manner as the Secretary may prescribe by regulations. **(c) Revocation of election; separate reserves** (1) **Revocation of election** (A) *In general* — The taxpayer may revoke an election under subsection (a)(1) with respect to any property. Such revocation, once made, shall be irrevocable. (B) *Time and manner of revocation* — Any revocation under subparagraph (A) shall be made at such time and in such manner as the Secretary may prescribe. (2) **Separate reserves required** — If a taxpayer makes an election under subsection (a)(1), the taxpayer shall establish with respect to the property for which the election was made— (A) a separate reserve for qualified reclamation costs, and (B) a separate reserve for qualified closing costs. **(d) Definitions and special rules relating to reclamation and closing costs** For purposes of this section— (1) **Current reclamation and closing costs** (A) *Current reclamation costs* — The term “current reclamation costs” means the amount which the taxpayer would be required to pay for qualified reclamation costs if the reclamation activities were performed currently. (B) *Current closing costs* (i) *In general* — The term “current closing costs” means the amount which the taxpayer would be required to pay for qualified closing costs if the closing activities were performed currently. (ii) *Costs computed on unit-of-production or capacity method* — Estimated closing costs shall— (I) in the case of the closing of any mine site, be computed on the unit-of-production method of accounting, and (II) in the case of the closing of any solid waste disposal site, be computed on the unit-of-capacity method. (2) **Qualified reclamation or closing costs** — The term “qualified reclamation or closing costs” means any of the following expenses: (A) *Mining reclamation and closing costs* — Any expenses incurred for any land reclamation or closing activity which is conducted in accordance with a reclamation plan (including an amendment or modification thereof)— (i) which— (I) is submitted pursuant to the provisions of section 511 or 528 of the Surface Mining Control and Reclamation Act of 1977 (as in effect on January 1, 1984), and (II) is part of a surface mining and reclamation permit granted under the provisions of title V of such Act (as so in effect), or (ii) which is submitted pursuant to any other Federal or State law which imposes surface mining reclamation and permit requirements substantially similar to the requirements imposed by title V of such Act (as so in effect). (B) *Solid waste disposal and closing costs* (i) *In general* — Any expenses incurred for any land reclamation or closing activity in connection with any solid waste disposal site which is conducted in accordance with any permit issued pursuant to— (I) any provision of the Solid Waste Disposal Act (as in effect on January 1, 1984) requiring such activity, or (II) any other Federal, State, or local law which imposes requirements substantially similar to the requirements imposed by the Solid Waste Disposal Act (as so in effect). (ii) *Exception for certain hazardous waste sites* — Clause (i) shall not apply to that portion of any property which is disturbed after the property is listed in the national contingency plan established under section 105 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980. (3) **Property** — The term “property” has the meaning given such term by section 614. (4) **Reserve property** — The term “reserve property” means any property with respect to which a reserve is established under subsection (a)(1).