- 31 -
situation was unusual because most OMT taxpayers could and did
claim a processing allowance equal to 65 percent of the maximum
combined profits. Thus, the use of the processing allowance by
Caland was not typical. For the foregoing reasons, we conclude
that we are not bound by Inland Steel in deciding this case.9
Respondent points out that Inland Steel Co. v. United
States, supra, focused on the significance of expenses that are
nonrecoverable under the OMT. As discussed in paragraph C-4,
supra p. 25, we need not decide whether the nonrecoverable
expenses are significant under section 1.901-2(b)(4)(i)(A),
Income Tax Regs., because we hold that petitioner meets the
requirements under section 1.901-2(b)(4)(i)(B), Income Tax Regs.
In Texasgulf, Inc. v. United States, 17 Cl. Ct. 275 (1989),
the U.S. Claims Court granted the Government's motion for partial
summary judgment. The U.S. Claims Court later modified that
ruling in an unpublished order. Texasgulf, Inc. v. United
States, No. 532-83T (Cl. Ct., Apr. 16, 1992) (order partially
denying summary judgment). In that order, the U.S. Claims Court
reaffirmed its opinion in Texasgulf, Inc. v. United States,
supra, that nonrecoverable expenses under the OMT were
significant as a matter of law under Inland Steel Co. v. United
States, 677 F.2d at 85. However, in that order, the U.S. Claims
9We note also that exploration expenses were not recoverable
in Inland Steel Co. v. United States, 230 Ct. Cl. 314, 677 F.2d
72 (1982), but are fully recoverable in the years in issue.
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