Rev. Rul. 55-350

The taxpayer mines salt from underground deposits by hydraulic methods. It is brought to the surface in the form of artificial brine and used in that form as raw material for the manufacture of chemical products which are the first products marketed by the taxpayer. For electrolytic manufacturing purposes, salt produced in brine has the same value as crude rock salt at the mouth of the mine. Held, in computing "gross income from the property," for percentage depletion purposes, the market value of crude rock salt at the mouth of the mine should be ascertained either from direct sales of such material or by working back from sales of manufactured products. In order to arrive at the market value of crude rock salt by working back from sales of manufactured products, it is necessary to reduce the sales price by costs, expenses, and profits which are attributable to any processes subsequent to the completion of the mining processes. No opinion is expressed with respect to natural brine, this ruling being limited to natural salt deposits in solid form