
    Colorado & Utah Coal Company, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 53799.
    Promulgated June 30, 1932.
    
      Tyson Dines, Esg., for the petitioner.
    
      T. M. Mather, Esg., for the respondent.
   OPINION.

Lansdon :

In its income-tax return for 1927 the petitioner deducted the amount of $67,827.47 representing the cost of the exploration of the Wolf Creek coal seam in the circumstances set forth in the stipulation. Upon audit of such return the respondent disallowed this item and also the amount of $63.58 representing excessive depletion of the Wolf Creek seam, made other minor adjustments not in controversy and determined the deficiency under review. Petitioner now admits that the loss claimed should be reduced by the amount of $2,534.24 representing salvage realized from the sale of portions of the equipment used in the abandoned development and that an item of $503.80 representing, worthless debts charged off in the taxable year was properly disallowed. Since no evidence as to the correct amount of depletion sustained in the operation of the petitioner’s mine in the taxable year was adduced by stipulation or otherwise, the amounts representing salvage, bad debts and depletion will be the elements of a settlement under Rule 50 in conformity with the admissions set forth above.

The petitioner claims the right to deduct the cost, less salvage, of its abandoned development as a loss sustained in the year of abandonment azid relies on our report in Belridge Oil Co. 11 B. T. A. 127, which appears to be exactly in point and in conformity with purposes and meaning of article 143 of Regulations 69. Cf. Sheridan Coal Co., 4 B. T. A. 563; C. U. Connellee, 4 B. T. A. 359; and Fraser Brick Co., 10 B. T. A. 1252.

In our opinion the petitioner sustained a deductible loss in the taxable year equal to the capitalized cost of the development of the abandoned mine, less the salvage realized from the disposition of equipment used in the exploration and no longer suitable for any work in which it was engaged.

Decision will be entered under Rule 50.  