Rev. Rul. 61-17

In view of the decision of the Supreme Court of the United States, in United States v. Cannelton Sewer Pipe Co. , 364 U.S. 76 (1960), Ct. D. 1849, C.B. 1960-2, 452, Revenue Ruling 290, C.B. 1953-2, 41, relating to calcium carbonates and shale mined for use in making cement, and Revenue Ruling 54-109, C.B. 1954-1, 62, and Revenue Ruling 55-244, C.B. 1955-1, 73, relating to shale and brick and tile clay used in the manufacture of brick and tile and kindred products, are hereby revoked. In the case of the minerals described in these Revenue Rulings, any process which is not necessary to bring such mineral to shipping form will not be considered an ordinary treatment process.

Revenue Ruling 56-405, C.B. 1956-2, 332, relating to the production of pulverized limestone and crushed rock as a byproduct, is hereby modified to the extent that it permits any process subsequent to primary crushing to be treated as an ordinary treatment process.

Cases closed on the basis of the Revenue Rulings mentioned above, prior to revocation or modification by this Revenue Ruling, will be reopened only in accordance with the procedures outlined in Revenue Procedure 59-25, C.B. 1959-2, 938.

In the case of calcium carbonates and other minerals mined and used by mine owners or operators in the manufacture of cement, section 4 of Public Law 86-781, approved September 14, 1960, C.B. 1960-2, 726, permits an election by such a mine owner or operator for taxable years beginning before January 1, 1961, to apply section 302(b) of the Public Debt and Tax Rate Extension Act of 1960, Public Law 86-564, approved June 30, 1960, C.B. 1960-2, 681, which sets forth the ordinary treatment processes applicable to such minerals.

In cases where a proper election is made by a mine owner or operator in accordance with section 1.9003-1(b) of the Income Tax Regulations (Treasury Decision 6492, approved September 14, 1960, C.B. 1960-2, 497), for taxable years to which the election is effective, all processes applied to calcium carbonates and other minerals mined and used by him in the making of cement up to the introduction of the kiln feed into the kiln (excluding any preheating process) are includible as a mining process, but any subsequent process is excluded from mining. In cases where a proper election is not made, the provisions of this ruling are to be applied. See Revenue Ruling 60-320, C.B. 1960-2, 198.

It is the position of the Service that in disposing of cases for taxable years beginning before January 1, 1961, whether such taxable years are under the 1939 Code or under the 1954 Code, the provisions of section 29.23(m)-1 of Regulations 111 and section 39.23(m)-1 of Regulations 118 (Regulations 118 made applicable to taxable years under the Internal Revenue Code of 1954 by T.D. 6091, C.B. 1954-2, 47), shall continue to be applied in determining gross income from mining. The following Revenue Rulings remain in effect: Rev. Rul. 184, C.B. 1953-2, 158; Rev. Rul. 55-78, C.B. 1955-1, 357; Rev. Rul. 55-350, C.B. 1955-1, 290; and Rev. Rul. 55-390, C.B. 1955-1, 290.

The foregoing is not to be construed in such a manner as to exclude as an ordinary treatment process any process specifically applicable to a particular mineral or ore as provided in section 114(b)(4)(B) of the 1939 Code or section 613(c) of the 1954 Code, such as the furnacing of quicksilver, the pulverization of talc, the burning of magnesite, or the sintering and nodulizing of phosphate rock, applied to ores or minerals extracted by the mine owner or operator.

¹ Also Released as Technical Information Release 289, dated January 16, 1961.