For purposes of this paragraph, the number of taxable years for which the taxpayer availed himself of the provisions of section 615 or the corresponding provisions of prior law is immaterial.
Example. A taxpayer on the calendar year basis, who has never claimed the benefits of section 615, or section 23(ff) of the 1939 Code, expended $200,000 for exploration expenditures during the year 1956. For each of the years 1957, 1958, 1959, and 1960 the taxpayer had exploration costs of $80,000. The taxpayer deducted or deferred the maximum amounts allowed for each of the years 1956, 1957, 1958, and 1959. None of the $80,000 expenditures for 1960 could be deducted or deferred by the taxpayer because he had already deducted or deferred exploration expenditures for 4 prior years. In 1961 the taxpayer expended $200,000 for exploration expenditures. The maximum amount the taxpayer may deduct or defer for the taxable year 1961 is $60,000 computed as follows:
Year | Expenditures | Deducted or deferred |
1956 | $200,000 | $100,000 |
1957 | 80,000 | 80,000 |
1958 | 80,000 | 80,000 |
1959 | 80,000 | 80,000 |
1960 | 80,000 | 0 |
Total | 340,000 |
Maximum amount allowable to taxpayer | $400,000 |
Sum of amounts obtained in (1) | 340,000 |
60,000 |
26 C.F.R. §1.615-4