Rev. Rul. 84-87

1984-1 C.B. 142, 1984-26 I.R.B. 14.

                       Internal Revenue Service
                                 Revenue Ruling

               DEPLETION;  PERCENTAGE DEPLETION RATE;  NAHCOLITE

                            Published: June 25, 1984

Section 4483. - -Exemptions [Tax on Use of Certain Vehicles], 26 CFR 4.4483-1:  State and local governmental exemption.

Section 613. - -Percentage Depletion, 26 CFR 1.613-2: Percentage depletion rates.

  Depletion;  percentage depletion rate;  nahcolite. Nahcolite falls under the category of "all other minerals" entitled to a percentage depletion rate of 14 percent under section 613(b)(7) of the Code.

ISSUE

  Whether "nahcolite" comes within the category of "all other minerals" entitled to the percentage depletion rate of 14 percent under section 613(b)(7) of the Internal Revenue Code.

FACTS

  Nahcolite is a naturally occurring sodium carbonate mineral with a chemical formula of NaHCO sub3 .  It is a soft, colorless, water-soluble substance with a vitreous luster.  Nahcolite occurs in association with oil shale and is separated from the oil shale by solution mining methods.  The extracted mineral will be marketed for such uses as food and baking, chemicals, pharmaceuticals, soaps and detergents, and others in competition with manufactured bicarbonate of soda or baking soda.

  Sections 613(b)(1) through (7) of the Code list various minerals and the percentage depletion rate to which each is entitled. Section 613(b)(7) provides for a percentage depletion rate of 14 percent for "all other minerals, including but not limited to", certain listed ones, subject only to the exceptions specifically set forth.

  In considering the classification into which minerals fall, the court pointed out in United States v. Fannin Investment Co., Inc., 322 F.2d 449 (1963), citing S.Rep. No. 781, 82nd Cong., 1st Sess. 37 (1951), 1951-2 C.B. 458, 485, that the "names of all the various enumerated minerals are  ...  intended to have their commonly understood commercial meaning."

  The term "nahcolite" has a commonly understood commercial meaning as a separately identifiable mineral possessing properties and characteristics that distinguish it from other sodium carbonate bearing minerals as well as other minerals listed under section 613(b).

  Nahcolite is not one of the minerals listed in subsection (1) through (6) of section 613(b) of the Code, nor is it one of the exclusions named in subsection (7) of that section.  Therefore, nahcolite, a mineral recognized in commercial industry, is included as one of the "all other minerals" in subsection (7) subject to a percentage depletion rate of 14 percent.

HOLDING

  Nahcolite falls under the category of "all other minerals" entitled to a percentage depletion rate of 14 percent under section 613(b)(7) of the Code.

Rev. Rul. 84-87, 1984-1 C.B. 142, 1984-26 I.R.B. 14.