Taxation - Income Tax -Gross Income From Mining as the Basis for Computing Percentage Depletion Allowances

Respondent, a miner of raw fire clay and a manufacturer of such clay into vitrified products, claimed a percentage depletion deduction based upon the gross income from the sale of its finished goods, contending that because its crude minerals could not be sold profitably in a local market, these final products were the first to meet the statutory standard of "commercially marketable mineral product." The district court and the Court of Appeals for the Seventh Circuit accepted respondent's contention. On certiorari to the United States Supreme Court, held, reversed, one Justice concurring. The fact that a taxpayer himself cannot sell his crude minerals at a profit does not make them commercially unmarketable within the meaning of the Code. United States v. Cannelton Sewer Pipe Co., 364 U.S. 76 (1960).