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Opinion of the Court
tate." 6 26 U. S. C. § 263(a)(1) (1976 ed. and Supp. V). We have said that "[t]he purpose of § 263 is to reflect the basic principle that a capital expenditure may not be deducted from current income. It serves to prevent a taxpayer from utilizing currently a deduction properly attributable, through amortization, to later tax years when the capital asset becomes income producing." Commissioner v. Idaho Power Co., 418 U. S. 1, 16 (1974). In turn, inclusion of the term "improvements and betterments" in Treas. Reg. § 1.1016-2(a) ensures the fulfillment of § 263's implicit promise: If a taxpayer cannot deduct an expenditure from current income because it has been deemed an "improvement or betterment" to property, he will be able to recover it later, either through a form of cost recovery such as depreciation or depletion, or upon sale as a deduction from the amount realized.7
6 Section 263(a)(1) has one of the longest lineages of any provision in the Internal Revenue Code. The Revenue Act of 1864 included a provision specifying that "no deduction shall be made for any amount paid out for new buildings, permanent improvements, or betterments, made to increase the value of any property or estate." § 117, 13 Stat. 282. The wording of this provision remained the same in § 28 of the Revenue Act of 1894, 28 Stat. 553, and in § 2(B) of the Revenue Act of 1913, 38 Stat. 167. The current wording of the provision was adopted in the Revenue Act of 1918. See § 215(b) of the Revenue Act of 1918, 40 Stat. 1069. The language of Treas. Reg. § 1.1016-2(a) apparently originated in a passage in a House Committee Report on the Revenue Act of 1924, discussing the progenitor of 26 U. S. C. § 1016. See H. R. Rep. No. 179, 68th Cong., 1st Sess., 50 (1924) ("Under this provision capital charges, such as improvements and betterments . . . are to be added to the cost of the property in determining the gain or loss from its subsequent sale"). The forerunner to Treas. Reg. § 1.1016-2(a) was issued that same year. See Treas. Regs. 65, Art. 581 (1924).
7 After tracing the word "improvement" from the regulations implementing § 611 through the regulations implementing § 1016 to the text of § 263, one might hope that § 263 itself would provide some insight into whether tangible development costs should be treated as an "improvement" to the mineral deposit, or as a separate property. Two circumstances dash this hope. First, as we said above, the phrase "improve-
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