TREATMENT OF CERTAIN IRON ORE ROYALTIES.

SEC. 227. TREATMENT OF CERTAIN IRON ORE ROYALTIES. (a) In General.— (1) Amendment of section 631(c).—Section 631 (c) (relating to disposal of coal with a retained economic interest) is amended— (A) by striking out the heading and inserting in lieu thereof the following: “(c) Disposal of Coal or Domestic Iron Ore With a Retained Economic Interest.—”: (B) by inserting “or iron ore mined in the United States,” after “coal (including lignite),”; (C) by inserting “or iron ore” after “coal” each other place it appears in section 631(c); and (D) by adding at the end thereof the following new sentence: “This subsection shall not apply to any disposal of iron ore— “(1) to a person whose relationship to the person disposing of such iron ore would result in the disallowance of losses under section 267 or 707(b), or “(2) to a person owned or controlled directly or indirectly by the same interests which own or control the person disposing of such iron ore.” (2) Amendment of section 1231 (b).—Section 1231(b) (2) (defining property used in the trade or business) is amended to read as follows: “(2) Timber, coal, or domestic iron ore.—Such term includes timber, coal, and iron ore with respect to which section 631 applies.” 78 Stat. 98 (3) Amendment of section 272.—The text of section 272 (relating to disposal of coal) is amended by inserting “or iron ore” after “coal” each place it appears. (b) Clerical Amendments.— (1) the heading of section 631 is amended to read as follows: “SEC. 631. GAIN OR LOSS IN THE CASE OF TIMBER, COAL, OR DOMESTIC IRON ORE.” (2) The table of sections for part III of subchapter I of chapter 1 is amended by striking out “Sec. 631. Gain or loss in the case of timber or coal.” and inserting in lieu thereof the following: “Sec. 631. Gain or loss in the case of timber, coal, or domestic iron ore.” (3) The heading of section 272 is amended to read as follows: “SEC. 272. DISPOSAL OF COAL OR DOMESTIC IRON ORE.” (4) The table of sections for part IX of subchapter B of chapter 1 is amended by striking out “Sec. 272. Disposal of coal.” and inserting in lieu thereof the following: “Sec. 272. Disposal of coal or domestic iron ore.” (5) Section 1016(a) (15) is amended by inserting “or domestic iron ore” after “coal”. (6) Section 1402(a) (3) (B) is amended to read as follows: “(B) from the cutting of timber, or the disposal of timber, coal, or iron ore, if section 631 applies to such gain or loss, or” (7) Section 211(a) (3) of the Social Security Act is amended by striking out clause (B) and inserting in lieu thereof “(B) from the cutting of timber, or the disposal of timber, coal, or iron ore, if section 631 of the Internal Revenue Code of 1954 applies to such gain or loss,”. (c) Effective Date.—The amendments made by this section shall apply with respect to amounts received or accrued in taxable years beginning after December 31, 1963, attributable to iron ore mined in such taxable years.