(1) All expen-ditures for machinery may be deducted in computing net proceeds as provided under ARM 42.25.1102 and 42.25.1103.

(2) Machinery shall include all that is used in:

(a) the construction;

(b) sinking, or running of shafts, tunnels, drifts; or

(c) other works in the extracting or mining of the ore deposit.

(3) In open pit and quarry mining operations, heavy equipment, including shovels, draglines, dozers, graders, loaders, trucks, railroad cars, locomotives, drilling, and pumping equipment used in the actual mining area (extracting ore to point of reduction) are to be considered as costs of machinery used in extracting and mining of the mineral.

(4) Expenditures for machinery or equipment rental used in the mining operations are deductible.

(5) No expenditures for machinery including leased and rented machinery shall be allowed as a deduction unless all machinery is reported to the local department field office in which the mine is located for assessment purposes.

(6) Deductions for mining equipment shared by otherwise separate mining operations must be pro-rated to each operation. Tonnage removed, man-hours expended, or other appropriate criteria may be used to allocate the expenses.

(7) Only the actual cost to acquire machinery and the subsequent direct operating, maintenance, and insurance costs are deductible.   Personal property taxes paid on machinery are not deductible.   Acquisition costs may include the cost of freight and delivery, assembly, installation, testing, and startup.