Sunoco, Inc. and Subsidiaries - Page 16

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             mining the first layer of ore, but it also allows eventual               
             access to lower layers of ore.  See Rev. Rul. 86-83,                     
             supra.  On the other hand, the costs incurred in removing                
             overburden in connection with a strip mine typically are                 
             integrally related to extraction of a limited area of the                
             ore or mineral to be mined and, for that reason, are                     
             included among the costs of producing a particular                       
             increment of the ore or mineral.  See Rev. Rul. 77-308,                  
             supra; Rev. Rul. 67-169, supra.                                          
                  Before 1983, development expenditures could be                      
             deducted under section 616(a) without limitation.                        
             Beginning in 1983, the current deduction of development                  
             expenditures under section 616(a) in the case of a                       
             corporation became subject to the special rules of section               
             291(b).  As first enacted, section 291(b) provided in                    
             pertinent part as follows:                                               

                       SEC. 291(b).  Special Rules for Treatment                      
                  of Intangible Drilling Costs and Mineral                            
                  Exploration and Development Costs.–-For purposes                    
                  of this subtitle, in the case of a corporation--                    
                            (1) In general.-–The amount allowable                     
                       as a deduction for any taxable year                            
                       (determined without regard to this section)                    
                                 *   *   *   *   *   *   *                            
                                 (B) under section 616(a) or 617,                     
                            shall be reduced by 15 percent.                           

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