Home/Court of Claims/Morton Salt Co. v. United States

Morton Salt Co. v. United States

161 Ct. Cl. 640
CourtUnited States Court of Claims
DecidedMay 10, 1963
DocketNo. 142-58
StatusPublished
Cited by6 cases

This text of 161 Ct. Cl. 640 (Morton Salt Co. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Morton Salt Co. v. United States, 161 Ct. Cl. 640 (cc 1963).

Opinion

JoNes, Chief Judge,

delivered the opinion of the court:

Plaintiff, an Illinois corporation having its principal place of business in Chicago, is engaged in the pursuit of extracting, processing, and selling salt in its various forms and grades. As a salt producer, plaintiff is entitled to deduct from its income and excess profits taxes amounts based upon an allowance for the depletion of its mineral resources. Plaintiff seeks a refund of its taxes for the years 1951,1952, 1953, and 1954 on the ground that it was not permitted to base its computations for depletion allowance on its gross income derived from the sale of finished products in those years. Taxpayer’s claim for the first three years in question is predicated upon the provisions of the Internal Revenue Code of 1939 while its 1954 claim is derived from similar provisions of the Internal Revenue Code of 1954.

Section 23 (m) of the Internal Revenue Code of 19391 provides for a reasonable depletion allowance for the mineral mining industry according to regulations to be prescribed by the Commissioner of Internal Revenue. The basis for this depletion allowance is as set forth in section 1142 of that Code, and establishes that sodium chloride [642]*642(salt) is to be depleted at 5 per centum of the gross income from the property during the taxable year.. Such “gross income,” the Code explains, means “gross income from mining.” Mining includes “not merely the extraction of ores or minerals from the ground but also the ordinary" treatment processes normally applied by the mine owners or operators in order to obtain the commercially marketable, mineral product or products.” These same provisions are carried forward essentially unchanged into the Internal Revenue Code of 1954, except that the depletion rate for sodium chloride is increased to 10 percent.3 For simplicity, then, we shall treat all plaintiff’s claims as though they arose under the earlier statutory provisions.

The sole issue 4 presented for decision in this case arises from plaintiff’s contention that all of its processes, including the packaging of its salt, are “normally applied” by miners in order to obtain a commercially marketable product within the meaning of the depletion statute and associated Treasury Regulations.5

[643]*643Plaintiff produces salt by hydraulic mining (brine wells) and dry mining (rock salt mines). The salt so produced falls into three basic categories: evaporated granulated salt, evaporated flake or grainer salt, and rock salt. The rock salt is produced by the dry mining method while both of the evaporated forms, basically, are produced by applying a heat evaporation process to the salt received in solution from the brine wells. These mining methods, with minor variations, are identical with those employed by other members of the salt industry. Since there are few secrets within the industry and since the systems are basically simple in principle, standardization is widespread. The process of dry mining, for example, has not been substantially changed in more than 50 years. As the parties have stipulated, and the trial commissioner has found, the treatment processes applied by plaintiff at its plants, with respect to the three basic types of salt, were as follows:

Free access — add to your briefcase to read the full text and ask questions with AI

Related

The Dow Chemical Company v. Commissioner of Internal Revenue
433 F.2d 283 (Sixth Circuit, 1970)
Barton Mines Corp. v. Commissioner
53 T.C. 241 (U.S. Tax Court, 1969)
United States v. California Portland Cement Company, a Corporation, Successor-In-Interest to Arizona Portland Cement Company, a Corporation, California Portland Cement Company, a Corporation, Successor-In-Interest to Arizona Portland Cement Company, a Corporation, Cross-Appellee v. United States of America, Cross-Appellant. United States of America v. California Portland Cement Company, California Portland Cement Company, Cross-Appellant v. United States of America, Cross-Appellee
413 F.2d 161 (Ninth Circuit, 1969)
United States v. California Portland Cement Co.
413 F.2d 161 (Ninth Circuit, 1969)
Dravo Corporation v. The United States
348 F.2d 542 (Court of Claims, 1965)

Cite This Page — Counsel Stack

Bluebook (online)
161 Ct. Cl. 640, Counsel Stack Legal Research, https://law.counselstack.com/opinion/morton-salt-co-v-united-states-cc-1963.