Sunoco, Inc. and Subsidiaries - Page 23

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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                   
                  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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