Sunoco, Inc. and Subsidiaries - Page 18

                                       - 18 -                                         
             Under this provision, the amount that otherwise would be                 
             deductible for the current year under section 616(a) is                  
             reduced by a certain percentage.  Sec. 291(b)(1)(B).  The                
             percentage changed over the years.  It was 15 percent for                
             taxable years 1983 and 1984, 20 percent for taxable years                
             1985 and 1986, and 30 percent for taxable years 1987                     
             through 1990.                                                            
                  Under section 291(b), as quoted above, the amount of                
             the reduction is, in effect, capitalized and amortized over              
             5 years beginning with the year in which the expenditures                
             were paid or incurred.  See sec. 291(b)(2)(B)(i).  In the                
             case of a mineral deposit located in the United States,                  
             the amount of the reduction is also treated as qualified                 
             investment for purposes of the investment tax credit.  See               
             sec. 291(b)(2)(B)(ii).  Section 291(b) became effective                  
             for tax years beginning after 1982.  Tax Equity and Fiscal               
             Responsibility Act of 1982, Pub. L. 97-248, sec. 204(a),                 
             96 Stat. 423.                                                            
                  On each of Cordero’s returns for 1983, 1984, 1985, and              
             1986, petitioner, in effect, treated the overburden removal              
             costs incurred at the Gillette mine as “development                      
             expenditures” within the meaning of section 616(a), in that              
             petitioner capitalized and amortized over 5 years a portion              
             of those costs, as required by section 291(b)(1)(B) and                  

Page:  Previous  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  Next

Last modified: May 25, 2011