REVENUE RULE 92-30

1992-1 C.B. 355, 1992-17 I.R.B. 9.

Internal Revenue Service
Revenue Ruling

COAL; RIVERBED DREDGING OPERATIONS; TAXABILITY

Published: April 27, 1992

Section 4121. Imposition of Tax, 26 CFR 48.4121-1: Imposition and rate of tax on coal.

Coal; riverbed dredging operations; taxability. Coal extracted from a riverbed by dredging is not subject to the tax imposed by section 4121(a) of the Code to the extent that the taxpayer can demonstrate that such coal has previously been taxed. Rev. Rul. 87-21 modified.

Rev. Rul. 87-21, 1987-1 C.B. 310, holds that coal extracted from a riverbed by dredging operations is subject to the excise tax imposed by section 4121(a) of the Internal Revenue Code at the rate imposed on coal from surface mines.

In Kanawha Dredging and Mineral Co., Ltd. v. United States, Civil No. 2:85- 1306 (S.D. W. Va. 1987), the court ruled that the taxpayer's sale of dredged coal was not subject to the tax imposed by section 4121(a) of the Code. In so ruling, it noted that 95 percent of the dredged coal had been previously taxed.

The Internal Revenue Service will follow the Kanawha decision in not taxing dredged coal to the extent that the taxpayer can demonstrate that such coal has previously been taxed under section 4121(a) of the Code.

EFFECT ON OTHER REVENUE RULINGS

Rev. Rul. 87-21 is modified.

DRAFTING INFORMATION

The principal author of this revenue ruling is Theodore N. Margopulos of the Office of Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue ruling contact Mr. Margopulos on (202) 343-8555 (not a toll-free call).

Rev. Rul. 92-30, 1992-1 C.B. 355, 1992-17 I.R.B. 9.