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reported the subject overburden removal costs on its
returns for 1983 through 1986 as mine development costs,
rather than as production costs. Petitioner states that
mischaracterizing Cordero’s mining method “resulted in
Petitioner’s misposting of Cordero’s overburden removal
costs as mine development.”
Petitioner argues that it is now required to correct
that mistake on each of those returns and it must
recharacterize the subject expenses from mine development
costs to production costs. Petitioner notes that the tax
treatment of the subject expenses follows from their
characterization and petitioner has no choice about the
tax treatment of those expenses once they are properly
recharacterized.
Petitioner asserts that, for tax purposes, the effect
of having treated the subject overburden removal costs as
mine development expenditures is that a portion of the
aggregate expense for the year was capitalized, as required
by section 291(b), and the remainder was deducted under
section 616(a). Petitioner argues that it is only the
treatment of the amount capitalized that it is seeking to
change. Petitioner reasons that most of the overburden
removal costs for the year were reported in the same manner
as production costs. As petitioner states: “petitioner
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