Sunoco, Inc. and Subsidiaries - Page 24

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             treated all of Cordero’s overburden removal costs as                     
             production costs on its federal income tax returns, except               
             for the amount capitalized due to the mischaracterization.”              
             (Emphasis supplied.)                                                     
                  Petitioner argues that it is not attempting to change               
             its method of accounting for production costs or its method              
             of accounting for mine development costs, nor is it                      
             attempting to change the treatment of a material item.                   
             According to petitioner, adjusting a deduction, as it                    
             proposes to do in this case, does not involve a change in                
             method of accounting, such that the taxpayer is required                 
             by section 446(e) to obtain the consent of the Secretary,                
             because the change does not “[involve] the proper time                   
             for the * * * taking of a deduction.”  See sec. 1.446-                   
             1(e)(2)(ii), Income Tax Regs.  Petitioner argues that                    
             correcting its mischaracterization of overburden removal                 
             expenses in this case, where petitioner has no choice in                 
             how to report the item for tax purposes, “involves a matter              
             of characterization not a matter of timing as defined in                 
             the regulations.”  Thus, petitioner argues, the change in                
             this case does not involve a change in method of account-                
             ing.  Petitioner asserts that there is a difference between              
             characterizing an item for tax purposes and accounting for               
             it.  Petitioner argues that it “should be permitted to                   

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