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portion of those costs attributable to exposed but unmined
coal, as it did for financial accounting purposes. The
aggregate of the deductions claimed on each of Cordero’s
separate returns for the removal of overburden at the
Gillette mine was equal to the amount added for the year to
the general ledger account described above, Preproduction
Overburden Removal-–Year to Date Change, except for the
amount allocated to ending inventory.
Each of Cordero’s separate returns for 1983 through
1986 includes an adjustment that has the effect of
capitalizing a portion of the subject overburden removal
costs as would be required under section 291(b)(1),
assuming that the total overburden removal costs incurred
during the year at the Gillette mine were mine development
expenditures that are otherwise deductible under section
616(a). The adjustment reported on Cordero’s separate
return for the first part of 1983 consists of a
“miscellaneous” reduction of the “other deductions” claimed
on line 26 of the return. The adjustments reported on
Cordero’s returns for the second part of 1983 and for 1984,
1985, and 1986 consist of reductions to Cordero’s cost of
goods sold and are labeled “mine development costs”.
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