Terrene Investments, Ltd., Deerbrook Construction, Inc., Tax Matters Partner - Page 20




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          most logical place for a worksite would be the northern section             
          of the property as it has the least amount of saleable materials.           
          As an operator might need additional land outside the work area             
          to put access roads in, we opt for the high end of local custom.            
          The Commissioner’s argument for almost double that amount of land           
          seems unreasonable.  Using our tons-per-acre number from the                
          previous section, the reduction attributable to a work area is              
          496,620 tons.9                                                              
                 iii.  Pit Slope                                                      
               We next turn to the issue of the pit wall’s angle of repose.           
          Terrene argues that local practice is to use nearly vertical                
          walls to maximize recovery, while the Commissioner argues for a             
          much more gentle slope as necessary to create stability and                 
          prevent the walls from collapsing.  In support of his position,             
          the Commissioner argues that while packed sand mixed with clay              
          can remain stable at steeper slopes, the soil on the subject                
          property is much too loose to hold.                                         
               We disagree.  Credible testimony at trial indicates that               
          most operators in the Houston area dig pits with almost vertical            
          walls, because enough clay is present in the pit wall to make it            
          more cohesive than ordinary soil and because the water that fills           
          a pit when the mining is finished produces a lower difference in            


               9 The math: 124,155 tons/acre x 4 acres = 496,620 tons.                







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