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recharacterize its overburden removal as production costs
consistent with its treatment of other production costs.”
As support for its first argument, that the proposed
change is not a change of accounting method, petitioner
principally relies upon Standard Oil Co. (Indiana) v.
Commissioner, 77 T.C. 349 (1981), which it argues “governs”
the case. Petitioner also cites Underhill v. Commissioner,
45 T.C. 489 (1966), Tex. Instruments, Inc., & Consol. Subs.
v. Commissioner, T.C. Memo. 1992-306, and Coulter Elecs.,
Inc. v. Commissioner, T.C. Memo. 1990-186, affd. without
published opinion 943 F.2d 1318 (11th Cir. 1991). Accord-
ing to petitioner, the central lesson of Standard Oil Co.
(Indiana) is that “correcting improperly characterized
costs is not a change in method of accounting if the
taxpayer already accounts for similar items on its tax
return”. Petitioner argues that, in this case, because
it accounts for its other production costs and the
noncapitalized portion of overburden removal as production
costs, there is no change in method of accounting when it
correctly characterizes overburden removal to eliminate the
erroneous capitalization.
In support of petitioner’s second argument, that there
is no need for the application of section 446(e) or 481,
petitioner argues that there is no potential for distortion
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