Rev. Rul. 60-319

Advice has been requested by taxpayers mining calcium carbonates and other minerals used by them in making cement as to whether, if an election is made under section 4 of Public Law 86-781, page 726, this Bulletin, approved September 14, 1960, the method or formula previously acceptable to the Internal Revenue Service for allocating costs and profits between mining and non-mining operations in computing gross income from mining may continue to be used for that purpose for the taxable years affected by the election.

An election made by such taxpayers under section 4 of P.L. 86-781 requires the application of the provisions of section 302(b) of the Public Debt and Tax Rate Extension Act of 1960, P.L. 86-564, page 681, this Bulletin, approved June 30, 1960, in computing gross income from mining for purposes of the percentage depletion allowances, for certain taxable years beginning before January 1, 1961.

In a number of instances, in connection with the examination of income tax returns filed by certain taxpayers mining calcium carbonates and other minerals used by them in making cement, a particular method of, or a formula for, allocating costs and profits between mining and non-mining operations in computing the taxpayer's gross income was found acceptable by the Service.

It is the position of the Service that, in computing the tax liability of such taxpayers who make the election under section 4 of P.L. 86-781 for the taxable years affected, the method or formula (based upon a determination that mining ceased prior to introduction of the kiln feed into the kiln) previously approved by the Service will not be disturbed if it was accepted after a thorough consideration of the matter on its merits. This position will not apply to the extent there has been a significant change in the facts and circumstances previously taken into account.

¹ Also released as Technical Information Release 258, issued September 23, 1960.