(1) All monies expended for costs of repairs and replacements of the milling and reduction works used in connection with the mine may be deducted in computing net proceeds as provided under ARM 42.25.1102 and 42.25.1103.  There must not be included in this schedule any amount expended for the construction of new buildings or the purchase or installing of new machinery or apparatus that are in the nature of additions or improvements to plant or equipment.  Deductions are allowable when the buildings constructed or repaired, or machinery purchased and installed, are for the sole purpose of replacing old, worn out, or obsolete buildings or machinery.

(2) If the person working the mine or deposit also operates the mill or reduction works and mills, or treats the ore or deposit, 6% of the assessed valuation for the calendar year the return represents may be deducted.   However, if the mill or reduction works is used to mill or treat the ore or deposit from any other mine or mines, then the amount of the 6% assessed valuation must be apportioned so that only the proper proportionate part thereof will be included in this return.

(3) Milling and reduction expenses are either:

(a) repairs or replacements; or

(b) additions or improvements to the plant.

(4) Costs for repairs and replacements which are fully deductible when incurred may not be added to the 6% assessed valuation base.