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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
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