Sunoco, Inc. and Subsidiaries - Page 10

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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