Cite as: 506 U. S. 546 (1993)
Opinion of the Court
parts of the Code]), adjusted as provided in section 1016." Section 1016 provides the rules for making "[a]djustments to basis."
The taxpayers, acknowledging the centrality of § 1016, seize on the last phrase of a regulation addressing that section:
"The cost or other basis shall be properly adjusted for any expenditure . . . or other item, properly chargeable to capital account, including the cost of improvements and betterments made to the property." Treas. Reg. § 1.1016-2(a).
The ordinary meanings of the terms "improvements" and "betterments," the Hills say, include all valuable additions to property that are more than mere repairs; the tangible costs that they have incurred to exploit their mineral deposits increase the value of those deposits, and in any case are specifically referred to in the regulations implementing § 611 as "improvements," see Treas. Reg. § 1.611-5; therefore, those costs should be included in the adjusted basis of the mineral deposit for purposes of § 1016.
The Hills' chosen passage, however, cannot carry the weight they ask it to bear. The purpose of the phrase "including the cost of improvements and betterments made to the property" in Treas. Reg. § 1.1016-2(a) is not to provide guidance in particular cases as to whether, for tax accounting purposes, an expense should be added to the basis of an existing "property," or treated as a separate "property" of its own. Rather, it is to ensure coordination of § 1016 with § 263, the Code section from which the term "improvements and betterments" (which should probably be read as a unit) is borrowed. Section 263(a)(1) provides that an expenditure may not currently be deducted from income if it is "paid out for new buildings or for permanent improvements or betterments made to increase the value of any property or es-
555
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