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this case involves a change in the treatment of a material
item; that is, “any item which involves the proper time for
the inclusion of the item in income or the taking of a
deduction.” Sec. 1.446-1(e)(2)(ii)(a), Income Tax Regs.
According to respondent, in determining whether an
accounting practice for an item involves timing, “the
relevant question is whether the practice permanently
changes the taxpayer’s lifetime income.”
Respondent argues that the change in petitioner’s
treatment of Cordero’s overburden removal costs involves
timing. The change is from development costs that are
deductible under section 616(a) but subject to partial
capitalization and amortization under section 291(b), to
production costs that can be offset against income without
limitation. Respondent argues that this change affects the
tax years in which the deductions are reported over the
life of the mine and does not affect petitioner’s lifetime
income. Therefore, respondent argues, the change involves
a material item under section 1.446-1(e)(2)(ii)(a), Income
Tax Regs., and is a change of accounting method because the
effect of the change would be to alter the timing of
deductions for overburden removal costs.
Respondent argues that the change goes beyond a mere
correction of a posting error or an attempt to remedy
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