R. A. Riddell, District Director, Internal Revenue, Los Angeles District v. California Portland Cement Company

The prior history of this controversy is fully set out in our opinion in Riddell v. California Portland Cement Company, 297 F.2d 345 (9th Cir. 1962), and need not be repeated here. In that case we noted that the taxpayer had elected to take the pre-kiln seed cutoff point as to all taxable years here involved, pursuant to Public Law 86-781 § 4 , 74 Stat. 1017 , 1018, 26 U.S.C. § 613 note. We remanded the cause to the district court “for the making of new findings and conclusions, and the entry of a judgment consistent with the teachings of [United States v. Cannelton Sewer Pipe Co., 364 U.S. 76 [ 80 S.Ct. 1581 , 4 L.Ed.2d 1581 ] (I960)] and with this opinion * * * and with the election made by California Portland Cement Company.” Upon remand the district court held that, in computing the taxpayer’s gross income from mining (its percentage depletion base) by the proportionate profits method, prescribed in the pertinent Treasury Regulations, for the limestone mined by the taxpayer and used to make cement and cement clinker, the costs of iron ore and quartzite added to the limestone are to be treated as mining costs. This appeal is from that holding.

The undisputed facts, so far as…