Union Texas International Corporation, f.k.a. Union Texas Petroleum Corporation - Page 36

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          such, Congress specifically provided the starting point whereby              
          taxable income from the property must be determined under section            
          613(a), and, by doing so, Congress adopted the focus on income               
          and expenses of individual properties historically applied under             
          section 613.                                                                 
               Taxable income from the property, pursuant to section 1.613-            
          5(a), Income Tax Regs., is defined as "gross income from the                 
          property" (as defined in section 613(c) and sections 1.613-3 and             
          1.613-4, Income Tax Regs.) less:                                             
               all allowable deductions (excluding any deduction for                   
               depletion) which are attributable to mining processes,                  
               including mining transportation, with respect to which                  
               depletion is claimed. These deductible items include                    
               operating expenses, certain selling expenses,                           
               administrative and financial overhead, depreciation,                    
               taxes deductible under section 162 or 164, losses                       
               sustained, intangible drilling and development * * *                    
               expenditures, etc. * * * Expenditures which may be                      
               attributable both to the mineral property upon which                    
               depletion is claimed and to other activities shall be                   
               properly apportioned to the mineral property and to                     
               such other activities.  Furthermore, where a taxpayer                   
               has more than one mineral property, deductions which                    
               are not directly attributable to a specific mineral                     
               property shall be properly apportioned among the                        
               several properties. * * *                                               

          Accordingly, section 1.613-5(a), Income Tax Regs., controls the              
          computation of the NIL for both percentage depletion and WPT                 
          purposes.                                                                    



          17(...continued)                                                             
               determined under section 613(a). [Emphasis added.]                      




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