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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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