Sunoco, Inc. and Subsidiaries - Page 25

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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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