Administrative Rules of Montana
Department 42 - REVENUE
Chapter 42.25 - NATURAL RESOURCES TAXES
Subchapter 42.25.11 - Net Proceeds Tax on Miscellaneous Mines
Rule 42.25.1118 - GENERAL TREATMENT OF DEDUCTIONS

(1) Mines Net Proceeds, Title 15, chapter 23, part 5, MCA, as amended, provides for the ad valorem taxation of minerals as they are extracted from the ground and is intended to provide a tax in lieu of a property tax on such minerals. To determine the assessed value of the mineral, certain specific expenses are permitted as deductions from the gross value of the mineral.

(2) The purpose of the regulations is to set forth the intent of the law and its interpretation by the courts and to provide firm, unambiguous guidelines for valuing the product of

a mining operation. The method followed determines the actual value of the extracted mineral and allows the deduction of just and equitable costs incurred in the actual mining, reduction, and marketing of the product.

(3) The Mines Net Proceeds law provides for limited deductions incurred at the mine location in Montana and not the broad spectrum of deductions allowed by income tax laws. These deductions are specific and should not be construed to include items not listed. The deductions may vary depending on the point of valuation of the mineral, but will never be greater than those provided by statute.