Sunoco, Inc. and Subsidiaries - Page 54

                                        - 54 -                                        
             at issue.  Neither does this case involve the correction of              
             internal inconsistencies discovered by the taxpayer as                   
             involved in Standard Oil Co. (Indiana) v. Commissioner, 77               
             T.C. 349 (1981).                                                         
                  In light of the above, we agree with respondent that                
             petitioner’s overburden removal costs incurred at the                    
             Gillette mine are a “material item” and that the change in               
             the treatment of that item proposed by petitioner is a                   
             change of accounting method that is subject to the consent               
             requirement of section 446(e).  Petitioner concededly did                
             not obtain the Commissioner’s consent and, therefore,                    
             petitioner is not entitled to make the change proposed.                  
                  Finally, we disagree with petitioner’s second argument              
             that, even if the change is a change of accounting method,               
             section 446(e) does not apply because there is no potential              
             for distortion in this case.  Petitioner argues that there               
             is no potential for distortion because the first year at                 
             issue, 1983, is the first year in which the tax treatment                
             of overburden removal costs differed from that of                        
             production costs.  This and other courts have rejected                   
             similar arguments in the past.  See Diebold, Inc. v. United              
             States, 891 F.2d at 1583; So. Pac. Transp. Co. v.                        
             Commissioner, 75 T.C. at 682; cf. Pac. Natl. Co. v. Welch,               
             304 U.S. 191 (1938); Lord v. United States, 296 F.2d 333,                






Page:  Previous  36  37  38  39  40  41  42  43  44  45  46  47  48  49  50  51  52  53  54  55  Next

Last modified: May 25, 2011