Sunoco, Inc. and Subsidiaries - Page 22

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             Petitioner’s Position                                                    
                  Petitioner’s position is that it is not required to                 
             obtain the consent of the Secretary under section 446(e)                 
             as a prerequisite to making this change.  In support of                  
             that position, petitioner makes two arguments.  First,                   
             petitioner argues the change that it seeks to make is                    
             not a change of method of accounting for purposes of                     
             section 446(e).  Rather, according to petitioner, it is                  
             a recharacterization of the expenses from development                    
             expenditures to production costs.  Second, petitioner                    
             argues, even if the change in its tax reporting of                       
             overburden removal costs is a change of accounting                       
             method, petitioner can still make the change without the                 
             Secretary’s consent.  According to petitioner, there is no               
             need for the application of section 446(e) or section 481                
             in this case because correcting the treatment of overburden              
             removal costs would not distort petitioner’s income.                     
                  In support of its first argument, petitioner explains               
             that the mistake in its reporting of the overburden removal              
             costs at the Gillette mine resulted from its mischaracter-               
             ization of the mining method that Cordero employed at the                
             mine.  According to petitioner, it had incorrectly viewed                
             Cordero’s mining method as open pit mining, rather than                  
             strip mining and, as a consequence, it had incorrectly                   

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Last modified: May 25, 2011