- 11 -
over 5 years beginning with the year the costs were paid
or incurred, as permitted by section 291(b)(2)(B)(i),
and through 1985 it included that amount in “qualified
investment” (within the meaning of section 46(c)) for
purposes of computing investment credit, as permitted by
section 291(b)(2)(B)(ii). Cordero also took the total
amount capitalized for each year into account in computing
the adjustment set forth on Schedule M-1, Reconciliation
of Income Per Books with Income Per Return, for “expenses
recorded on books this year not deducted on this return”.
As noted above, Cordero mistakenly capitalized 20
percent of the mine development expenses reported for 1984,
rather than 15 percent, the statutory rate then in effect
under section 291(b)(1). The parties agree that petitioner
is entitled to increase the aggregate deduction claimed in
1984 by the excess amount capitalized, $1,076,080, as long
as petitioner also makes appropriate correlative
adjustments to petitioner’s reported investment tax credit
for 1984 and to its reported amortization for 1984 through
1988.
For each of the taxable years 1987 through 1990,
Cordero treated all of its overburden removal costs at the
Gillette mine as mine development costs, subject to section
291(b). For each of those years, Cordero capitalized 30
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011