Sunoco, Inc. and Subsidiaries - Page 29

                                       - 29 -                                         
             internal inconsistencies, as was involved in Standard Oil                
             Co. (Indiana) v. Commissioner, supra.  Respondent                        
             distinguishes Standard Oil Co. (Indiana) on the ground                   
             that in this case “petitioner treated all of Cordero’s                   
             overburden removal costs as mine development expenses                    
             deductible under I.R.C. � 616(a) for purposes of applying                
             the provisions of � 291(b)”, not just the amount                         
             capitalized.  In effect, respondent argues that the                      
             overburden removal costs in this case were not treated                   
             inconsistently.  As an example, respondent notes that for                
             the first part of 1983, Cordero calculated overburden                    
             removal costs of $13,743,557 and capitalized and amortized               
             15 percent of that amount, or $2,061,534, as required by                 
             section 291(b).  Respondent notes:  “If petitioner had                   
             treated any portion of Cordero’s overburden costs as                     
             production costs, then the applicable percentage rate                    
             specified in section 291 would not have been applied                     
             against that portion, and a smaller amount of overburden                 
             removal costs would have been capitalized and amortized                  
             each year.”                                                              

             Application of Section 446 to a Member of an Affiliated                  
             Group of Corporations                                                    
                  In the case of an affiliated group of corporations,                 
             such as petitioner and the members of its affiliated group,              






Page:  Previous  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  37  38  Next

Last modified: May 25, 2011