- 38 -
it grafted the WPT NIL onto the existing body of percentage
depletion law by incorporating section 613(a) into section
4988(b)(3)(A). A plain reading of section 4988(b)(3)(A) requires
petitioners to compute the NIL for WPT purposes in the same
manner as they computed the NIL under section 613 for percentage
depletion purposes. See Chevron U.S.A. Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984) (the court must give
effect to the unambiguously expressed intent of Congress). It is
unreasonable to believe Congress intended to allow taxpayers to
compute their NIL differently for percentage depletion purposes
and WPT purposes, where Congress explicitly incorporated by
reference, the section 613 NIL calculation into section 4988. If
taxpayers were able to utilize petitioners' approach they could
manipulate their allocation methods under sections 613 and 4988,
thereby allowing taxpayers to increase their percentage depletion
deductions by excluding certain items of overhead from the
allocation process, and decrease their WPT by including the same
items of overhead in the allocation process. Cf. Portland Golf
Club v. Commissioner, 497 U.S. 154, 166-170 (1990)(taxpayer was
required to use same method of allocating fixed expenses, in
determining whether nonmember sales activity was undertaken with
intent to earn profit, that it did in calculating its actual loss
from those sales).
Finally, we note that petitioners' reliance on Shell Oil Co.
v. Commissioner, supra, is misplaced, because in that case the
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