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percent of the amount allowable as a deduction under
section 616(a), as required by section 291(b)(1), and it
amortized that amount over 60 months beginning with the
month in which the costs were paid or incurred, as
permitted by section 291(b)(2) as in effect during 1987
through 1990. For alternative minimum tax purposes,
Cordero also treated overburden removal costs as mine
development costs, and Cordero took advantage of the
adjustments permitted under section 56(a)(2) under which a
taxpayer’s taxable income for the taxable year is adjusted
for purposes of computing alternative minimum taxable
income by capitalizing the amount allowable as a deduction
under section 616(a) (determined without regard to section
291(b)) and amortizing that amount ratably over the 10-year
period beginning with the taxable year in which the
expenditures were made.
For each of the taxable years 1991 through 1993,
Cordero elected under section 59(e) to amortize all of its
mine development costs. In accordance with this election,
Cordero capitalized all of its mine development expenses
and amortized those costs over 10 years. Cordero’s
election under section 59(e) covered overburden removal
costs of $17,129,007 that were paid or incurred in 1991,
overburden removal costs of $19,799,530 that were paid
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