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The following schedule shows the aggregate income
offsets or deductions claimed on each of Cordero’s separate
returns that Cordero treated as mine development
expenditures (column 2), and the portion thereof that was
capitalized (column 3), pursuant to section 291(b)(1):
Total develop- Total amount Overburden Amount
Year ment costs capitalized removal costs capitalized
1983 $16,871,299 $2,530,695 $13,743,557 $2,061,534
1983 3,456,699 518,505 3,456,699 518,505
1984 21,521,593 1 4,304,319 19,071,400 13,814,280
1985 218,033,139 3 3,606,278 17,756,308 3,551,262
1986 10,714,828 2,142,966 10,452,801 2,090,560
1 Cordero capitalized 20 rather than 15 percent, the statutory rate,
and as a result overstated the total amount capitalized by $1,076,080.
2 The parties agree that this amount is overstated by $16,760.
3 The parties agree that this amount is overstated by $3,002.
Column 4 of the above schedule, entitled “Overburden
removal costs”, shows the amounts of overburden removal
costs that were incurred at the Gillette mine and were
treated by Cordero as mine development expenditures. These
amounts form the bulk of Cordero’s total development costs
set out in column 2. Column 5 of the above schedule,
entitled “Amount capitalized”, shows the portion of each
amount in column 4 that was capitalized, pursuant to
section 291(b)(1). These amounts form the bulk of the
total amount capitalized set out in column 3.
Generally, Cordero amortized the total amount
capitalized (column 3) for each of the years in issue
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Last modified: May 25, 2011