(1) Labor expenses will include amounts paid to employees, up to and including, mine and mill foremen and superintendents. � No deduction will be allowed for any person or officer not actually engaged in the mining or milling operations. � Labor expenses will be deductible to the extent they relate specifically to the mining and processing operations up to the point of mineral valuation for the following functions:

(a) overburden removal;

(b) drilling and blasting;

(c) loading;

(d) hauling;

(e) crushing;

(f) washing, sorting, and screening;

(g) drying;

(h) testing to satisfy federal and state health and safety laws;

(i) plant security;

(j) assaying and sampling;

(k) reclamation;

(l) engineering and geological services performed in Montana for existing operations; and

(m) equipment maintenance.

(2) Labor expenses are not deductible for the following functions:

(a) accounting and bookkeeping;

(b) legal;

(c) management above the superintendent level;

(d) engineering and geological services performed out of Montana or related to exploration;

(e) janitorial;

(f) laboratory work except as allowed in (h) and (j) above; and

(g) any other labor expenses incurred beyond the point of mineral valuation.

(3) The following items may be included in the amounts deducted for the functions listed in (1) :

(a) wages and salaries;

(b) overtime;

(c) holiday and vacation pay;

(d) shift differentials;

(e) payroll taxes;

(f) health and welfare benefits;

(g) safety clothing;

(h) locker and shower facilities;

(i) meal expenses;

(j) bonuses;

(k) safety training;

(l) transportation to the mine provided by employer;

(m) workers' compensation insurance; and

(n) retirement fund contributions provided for in labor contracts.

(4) Accounting records for labor expenses must be maintained by the taxpayer.� These records must include contemporaneous man-hour logs for employees who do not work 100% of their time in one of the functions listed in (1) or who are involved in processing minerals both up to and beyond the point of mineral valuation.