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I'd like to write off some of my mining costs this year so ...


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This year I spent a lot of money on detectors and travel to use them. I looked at my tax return for last year and there is a line for deducting mining costs. These costs could affect my gross taxable income. I want the deductions.

Has anyone deducted mining costs when you have not reported income from mining?

This publication from the IRS recognized that exploration expenses were deducted but rarely were they ever recovered at a later time when production began.


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For your sake go talk to the IRS! Normally to show a profit it's a three year lag, mining may be different. Visit the

IRS office and get a copy of the Federal Reg. that covers that. No one on earth is nastier than a young

aggressive IRS agent!

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RUN don't walk to your closest CPA as much is needed to qualify. Daily logs, recepts for all expenses/income, and the list is long for required documents. You can only take a loss for a short period of time(changes frequently fed and state by state). I did it for over 17 years but factory, store and numerous ops. You are almost guaranteed a IRS audit also, I had 7 in a row and owed no dough but religiously kept documents and logs-Wish ya luck but educate first with a good CPA-John

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Do you really want them looking at your business? Is finding and selling enough AU to warrant the write-offs something you want to declare or would it be better to keep it as a (hush) hobby. I know that when I went to file for a business license at the county they about fell out of their chair digging out all the regulations / laws pertaining to operating a mining company in the county. I didn't file for the business license and don't deduct for my travels or equipment.

Edited by GeoJack
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Ok, I understand the scrutiny that comes with taking a 'hobby business' to another level. Normally if you don't make or declare income at it then you can't take deductions.

The interest I am showing in this subject now comes about because of a line I read on a return which asked if I had any losses related to mining. Normally I would say that if I don't have any income related to mining why would they ask me specifically if I have any loses?

It seems that there really isn't a way or a special provision for treating prospecting differently but it is a large percentage of my present expenses.

The link that I provided is still an interesting read because they know in mining that receipts for expenses and deductions are kept and the 'product' is often times sold for cash. The cash is much less reported.

My mining activity would be in the deserts of California, Arizona and Nevada. Without claims or property it would be difficult and probably foolish to try and claim deductions.

Beach finds are not mining activity and we just add it to inventory. :thumbsupanim

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Fantastic article on YAHOO trending stories"How to turn your hobby into a business". EXCELLENT info on all the IRS rules/regs and how to get by. Can't copy/paste here and covered by copywrite anyhow but if your serious look and print-John

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