Cite as: 506 U. S. 546 (1993)
Opinion of the Court
century ago, "[t]h[e] distinction between depletion and depreciation runs through the basis provisions of the [Internal Revenue Code]." Choate v. Commissioner, 324 U. S. 1, 3 (1945). Thus, the Code's depreciation allowance "does not apply to natural resources which are subject to the allowance for depletion provided in section 611." Treas. Reg. § 1.167(a)-2. Accordingly, § 611 itself carefully appends, to its provision for "a reasonable allowance for depletion" in the case of natural deposits and timber, the qualification "and for depreciation of improvements, according to the peculiar conditions in each case." 10 26 U. S. C. § 611(a) (1976 ed.); see Treas. Reg. § 1.611-5(a). To implement this distinction, the regulations under § 611, mentioned above, separately define "mineral deposit" as "minerals in place," Treas. Reg. § 1.611- 1(d)(4), and "mineral enterprise" as including "the mineral deposit or deposits and improvements," § 1.611-1(d)(3). The section defining "mineral deposit" then further provides that "[w]hen a mineral enterprise is acquired as a unit, the cost of any interest in the mineral deposit or deposits is that proportion of the total cost of the mineral enterprise which the value of the interest in the deposit or deposits bears to the value of the entire enterprise at the time of its acquisition." Treas. Reg. § 1.611-1(d)(4); see also § 1.611-2(g)(2)(vii) (requiring a statement to be attached to the taxpayer's return showing "[a]n allocation of the cost or value among the mineral property, improvements and the surface of the land for purposes other than mineral production"). These provisions are designed to isolate those portions of the cost of a "mineral enterprise" that are subject to recovery through depletion.
Thus, just as one generally cannot calculate an adjusted basis under § 1016 by treating an apartment building as "more land," one generally cannot treat tangible tools and
10 As we have noted, see n. 7, supra, the word "improvements" carries a different meaning here than it does within the term "improvements or betterments" as used in § 263(a).
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