Nev. Admin. Code § 362.50 — 362.50

NAC 362.050    Deductions: Operating costs. [Effective through December 31,
2015.] ( NRS
360.090 , 362.120 )
1.  In computing the costs enumerated in
subsection 3 of NRS 362.120 , the
following specific items are deductible except as limited by subsection 2 of
this section and subsection 6 of NRS
362.120 :
(a) The cost of renting equipment, if the amount
paid as rental is commercially reasonable in the circumstances;
(b) The cost of contracting for all or part of the
mine’s operations, if the contract price is commercially reasonable in the
circumstances and the cost would otherwise be deductible if the service or
activity contracted for was provided or performed directly by the operator of
the mine;
(c) The cost of Nevada-based corporate services, as
defined in subsection 8 of NRS
362.120 , which a Nevada mine receives under contract from its corporate
office or the office of a related corporation, if:
(1) The cost is commercially reasonable in the
circumstances; and
(2) The cost is separately stated in a manner
consistent with good accounting practices;
(d) The reasonable cost of management provided to a
joint venture by a member, if the fees relate directly to the operation of the
mine;
(e) If the taxpayer has a policy which prohibits
the personal use of a vehicle by an employee, the cost of vehicle allowances to
the extent that the vehicle is actively engaged in the business of the mine;
(f) The cost of transportation services between
points of origin and destination within this State provided by a third party or
the owner of the mine for employees to get to and from a point of extraction or
reduction of the mine, excluding any cost for the repair, maintenance and
depreciation of any facilities or equipment under the jurisdiction of the Public
Utilities Commission of Nevada or the Nevada Transportation Authority; and
(g) The cost of compensation for employees. As used
in this paragraph, “compensation” means wages, salaries, paid vacation leave,
paid sick leave, performance-related bonuses, contributions to and
administrative costs of qualified pension and retirement plans, 401k and
similar deferred benefit plans, Medicare contributions, social security
payments, state and federal unemployment compensation contributions or
payments, and postemployment training expenses for training conducted in
compliance with the Mine Safety and Health Administration and the Division of
Industrial Relations of the Department of Business and Industry or their
successor organizations.
2.  In computing the costs enumerated in
subsection 3 of NRS 362.120 , the
following specific items are not deductible:
(a) Cost or expenses which are capitalized;
(b) Gifts, grants and donations;
(c) Costs of public relations and influencing or
seeking to influence governmental activities;
(d) Costs of developmental work related to ore
bodies outside the geographic area described in the plan for the mine filed
with the Division of Minerals of the Commission on Mineral Resources pursuant
to NRS 519A.210 ;
(e) Any tax that an operator of a mine is required
to pay to the Federal Government, this State or any other state, or a political
subdivision thereof;
(f) Costs associated with providing health clubs
for employees;
(g) Costs incurred for preemployment activities,
including, without limitation, reimbursement for expenses for moving and
relocation;
(h) Except as otherwise provided in paragraph (g)
of subsection 1 of this section and paragraph (g) of subsection 3 of NRS 362.120 , costs associated with
union trust funds;
(i) Costs associated with providing day care
facilities for the children of employees;
(j) General liability insurance;
(k) Excess policies of general liability insurance;
(l) Fire insurance on any machinery, equipment,
apparatus, works, plants or facilities; and
(m) Expenses described in subsection 7 of NRS 362.120 .
3.  The taxes described in paragraph (e) of
subsection 2 of this section and paragraph (g) of subsection 7 of NRS 362.120 do not include any
contributions or payments described in paragraph (g) of subsection 3 of NRS 362.120 .
4.  If a cost is partially deductible and
partially nondeductible, the deductible portion must be allowed. In determining
the portion of such costs which is allowable as a deduction, a reasonable
allocation must be made based upon available information. For the purposes of
paragraph (b) of subsection 1, there is a rebuttable presumption that not less
than 20 percent of the cost of contracting for all or part of a mine’s
operations is attributable to the cost of services and activities that would
not be deductible if provided or performed directly by the operator of the
mine.
[Tax Comm’n, Mine Proceeds Reg. Nos. 1-7, 9-14, 19, 20
& 25, eff. 6-28-65; A and renumbered as Reg. No. 2, 1-22-79]—(NAC A 5-3-84;
R048-01, 11-1-2001; R161-05, 2-23-2006; R058-11, 12-30-2011, eff. 1-1-2012;
R058-11, 12-30-2011, eff. 1-1-2014)
REVISER’S NOTES.
The regulation of the Nevada Tax Commission filed with
the Secretary of State on December 30, 2011 (LCB File No. R058-11), which makes
various changes to this chapter on January 1, 2012, and January 1, 2014,
contains the following provisions not included in NAC:
“Sec. 16.  Sections 1 to 6,
inclusive, 9, 11, 12 and 15 of this regulation [creating NAC
362.001 , 362.006 , 362.007 ,
362.008 and 362.035 , amending
NAC 362.050 , 362.200
and 362.310 , and repealing NAC 362.220 , 362.230 , 362.240 , 362.260 , 362.300 , 362.320 and 362.330 on January 1, 2012]:
1.  Do not apply to or affect any
determination of gross yield or net proceeds required pursuant to NRS 362.100 to 362.240 , inclusive, for the
calendar year 2011.
2.  Apply for the purposes of estimating
and determining gross yield and net proceeds pursuant to NRS 362.100 to 362.240 , inclusive, for the
calendar year 2012 and each calendar year thereafter.
Sec. 17.  Sections 10, 13 and 14 of
this regulation [amending NAC 362.035 , 362.050 and 362.310 on
January 1, 2014]:
1.  Do not apply to or affect any
determination of gross yield or net proceeds required pursuant to NRS 362.100 to 362.240 , inclusive, for the
calendar year 2013.
2.  Apply for the purposes of estimating
and determining gross yield and net proceeds pursuant to NRS 362.100 to 362.240 , inclusive, for the
calendar year 2014 and each calendar year thereafter.”
The reference to paragraph (g) of subsection 3 of NRS 362.120 in subsection 3 of this
section was temporarily removed from that subsection by Senate Bill No. 493 of
the 2011 Nevada Legislature, which was further amended by Assembly Bill No. 499
of the 2013 Nevada Legislature (see chapter 449, Stats. 2011, at p. 2695, and
chapter 553, Stats. 2013, at p. 3795, respectively). The language contained in
that paragraph will be restored effective January 1, 2016.
NAC 362.050    Deductions:
Operating costs. [Effective January 1, 2016.] ( NRS 360.090 , 362.120 )
1.  In computing the costs enumerated in
subsection 3 of NRS 362.120 , the
following specific items are deductible except as limited by subsection 2 of
this section and subsection 6 of NRS
362.120 :
(a) The cost of renting equipment, if the amount
paid as rental is commercially reasonable in the circumstances;
(b) The cost of contracting for all or part of the
mine’s operations, if the contract price is commercially reasonable in the
circumstances and the cost would otherwise be deductible if the service or
activity contracted for was provided or performed directly by the operator of
the mine;
(c) The cost of Nevada-based corporate services, as
defined in subsection 8 of NRS
362.120 , which a Nevada mine receives under contract from its corporate
office or the office of a related corporation, if:
(1) The cost is commercially reasonable in the
circumstances; and
(2) The cost is separately stated in a manner
consistent with good accounting practices;
(d) The reasonable cost of management provided to a
joint venture by a member, if the fees relate directly to the operation of the
mine;
(e) If the taxpayer has a policy which prohibits
the personal use of a vehicle by an employee, the cost of vehicle allowances to
the extent that the vehicle is actively engaged in the business of the mine;
(f) The cost of transportation services between
points of origin and destination within this State provided by a third party or
the owner of the mine for employees to get to and from a point of extraction or
reduction of the mine, excluding any cost for the repair, maintenance and
depreciation of any facilities or equipment under the jurisdiction of the
Public Utilities Commission of Nevada or the Nevada Transportation Authority;
and
(g) The cost of compensation for employees. As used
in this paragraph, “compensation” means wages, salaries, paid vacation leave,
paid sick leave, performance-related bonuses, contributions to and
administrative costs of qualified pension and retirement plans, 401k and
similar deferred benefit plans, Medicare contributions, social security
payments, state and federal unemployment compensation contributions or
payments, and postemployment training expenses for training conducted in
compliance with the Mine Safety and Health Administration and the Division of
Industrial Relations of the Department of Business and Industry or their
successor organizations.
2.  In computing the costs enumerated in
subsection 3 of NRS 362.120 , the
following specific items are not deductible:
(a) Cost or expenses which are capitalized;
(b) Gifts, grants and donations;
(c) Costs of public relations and influencing or
seeking to influence governmental activities;
(d) Costs of developmental work related to ore
bodies outside the geographic area described in the plan for the mine filed
with the Division of Minerals of the Commission on Mineral Resources pursuant
to NRS 519A.210 ;
(e) Any tax that an operator of a mine is required
to pay to the Federal Government, this State or any other state, or a political
subdivision thereof;
(f) Costs associated with providing health clubs
for employees;
(g) Costs incurred for preemployment activities,
including, without limitation, reimbursement for expenses for moving and
relocation;
(h) Except as otherwise provided in paragraph (g)
of subsection 1 of this section and paragraph (g) of subsection 3 of NRS 362.120 , costs associated with
union trust funds;
(i) Costs associated with providing day care
facilities for the children of employees;
(j) General liability insurance;
(k) Excess policies of general liability insurance;
(l) Fire insurance on any machinery, equipment,
apparatus, works, plants or facilities; and
(m) Expenses described in subsection 7 of NRS 362.120 .
3.  The taxes described in paragraph (e) of
subsection 2 of this section and paragraph (g) of subsection 7 of NRS 362.120 do not include any
contributions or payments described in paragraph (h) of subsection 3 of NRS 362.120 .
4.  If a cost is partially deductible and
partially nondeductible, the deductible portion must be allowed. In determining
the portion of such costs which is allowable as a deduction, a reasonable
allocation must be made based upon available information. For the purposes of
paragraph (b) of subsection 1, there is a rebuttable presumption that not less
than 20 percent of the cost of contracting for all or part of a mine’s
operations is attributable to the cost of services and activities that would
not be deductible if provided or performed directly by the operator of the
mine.
[Tax Comm’n, Mine Proceeds Reg. Nos. 1-7, 9-14, 19, 20
& 25, eff. 6-28-65; A and renumbered as Reg. No. 2, 1-22-79]—(NAC A 5-3-84;
R048-01, 11-1-2001; R161-05, 2-23-2006; R058-11, 12-30-2011, eff. 1-1-2012;
R058-11, 12-30-2011, eff. 1-1-2014)