EXPLORATION EXPENDITURES.

SEC. 504. EXPLORATION EXPENDITURES. (a) Amendments to Section 615.—Section 615 (relating to exploration expenditures) is amended— (1) by striking out the heading and inserting in lieu thereof: “SEC. 615. PRE-1970 EXPLORATION EXPENDITURES.”; and (2) by adding at the end thereof the following new subsection: “(h) Termination.—The provisions of this section shall not apply with respect to expenditures paid or incurred after December 31, 1969.” (b) Amendments to Section 617.—Section 617 (relating to additional exploration expenditures in the case of domestic mining) is amended— (1) by striking out the heading and inserting in lieu thereof: “SEC. 617. DEDUCTION AND RECAPTURE OF CERTAIN MINING EXPLORATION EXPENDITURES.”; (2) by striking out in subsection (a)(1) “in the United States or on the Outer Continental Shelf (within the meaning of section 2 of the Outer Continental Shelf Lands Act, as amended and supplemented; 43 U.S.C. 1331)”; and (3) by striking out subsection (h) and inserting the following in lieu thereof: “(h) Limitation.— “(1) In general.—Subsection (a) shall apply to any amount paid or incurred after December 31, 1969, with respect to any deposit of ore or other mineral located outside the United States, only to the extent that such amount, when added to the amounts which are or have been deducted under subsection (a) and section 615(a) and the amounts which are or have been treated as deferred expenses under section 615(b), or the corresponding provisions of prior law, does not exceed $400,000. “(2) Amounts taken into account.—For purposes of paragraph (1), there shall be taken into account amounts deducted and amounts treated as deferred expenses by— “(A) the taxpayer, and “(B) any individual or corporation who has transferred to the taxpayer any mineral property. “(3) Application of paragraph (2)(b).—Paragraph (2)(B) shall apply with respect to all amounts deducted and all amounts treated as deferred expenses which were paid or incurred before the latest such transfer from the individual or corporation to the taxpayer. Paragraph (2)(B) shall apply only if— “(A) the taxpayer acquired any mineral property from the individual or corporation under circumstances which make paragraph (7), (8), (11), (15), (17), (20), or (22) of section 113(a) of the Internal Revenue Code of 1939 apply to such transfer; “(B) the taxpayer would be entitled under section 381(c) (10) to deduct expenses deferred under section 615(b) had the distributor or transferor corporation elected to defer such expenses; or “(C) the taxpayer acquired any mineral property from the individual or corporation under circumstances which make section 334(b), 362(a) and (b), 372(a), 373(b)(1), 1051, or 1082 apply to such transfer.” 83 Stat. 633 (c) Conforming Amendments.— (1) Section 243(b)(3)(C)(iii) is amended by striking out “section 615(c)(1)” and inserting in lieu thereof “sections 615(c)(1) and 617(h)(1)”. (2) Paragraph (10) of section 381(c) is amended— (A) by striking out so much as precedes the second sentence and inserting in lieu thereof: “(10) Treatment of certain mining exploration and development expenses of distributor or transferor corporation.—The acquiring corporation shall be entitled to deduct, as if it were the distributor or transferor corporation, expenses deferred under sections 615 and 616 (relating to pre-1970 exploration expenditures and development expenditures, respectively) if the distributor or transferor corporation has so elected.”; and (B) by adding at the end thereof the following new sentence: “For the purpose of applying the limitation provided in section 617, if, for any taxable year, the distributor or transferor corporation was allowed the deduction in section 615(a) or section 617(a) or made the election provided in section 615(b), the acquiring corporation shall be deemed to have been allowed such deduction or deductions or to have made such election, as the case may be.” (3) Section 703(b) is amended by striking out “(relating to exploration expenditures) or under section 617 (relating to additional exploration expenditures in the case of domestic mining)” and inserting in lieu thereof “(relating to pre-1970 exploration expenditures) or under section 617 (relating to deduction and recapture of certain mining exploration expenditures)”. (4) Paragraph (10) of section 1016(a) is amended by inserting “pre-1970” after “certain”. (5) The table of sections for part I of subchapter I of Chapter 1 is amended— (A) by striking out the item relating to section 615 and inserting in lieu thereof: “Sec. 615. Pre-1970 exploration expenditures.”; and (B) by striking out the item relating to section 617 and inserting in lieu thereof: “Sec. 617. Deduction and recapture of certain mining exploration expenditures.” (d) Effective Date.— (1) In general.—The amendments made by this section shall apply with respect to exploration expenditures paid or incurred after December 31, 1969. (2) Presumption of election under section 617.—For purposes of section 617 of the Internal Revenue Code of 1954, an election under section 615(e) of such Code, which is effective with respect to exploration expenditures paid or incurred before January 1, 1970, shall be treated as an election under section 617(a) of such Code with respect to exploration expenditures paid or incurred after December 31, 1969. The preceding sentence shall not apply to any taxpayer who notifies the Secretary of the Treasury or his delegate (at such time and in such manner as the Secretary or his delegate prescribes by regulations) that he does not desire his election under section 615(e) to be so treated.