Marsh Fork and Commissioner of Internal Revenue v. H.E.
Harman Coal Corp., 200 F.2d 415 (4th Cir. 1952), also decided
by Judge Parker, make it clear that an expenditure qualifies
as a receding face deduction only when it is necessitated
solely by the recession of the working faces of the mine. See
also United States v. Amherst Coal Co., 272 F.2d 930, 934 (4th
In the Harman case, Judge Parker stated of the expenditures
there in issue: "They have been necessitated not by the
removal of the coal during the years in which they were made
but by the thinness of one of the seams, the radical change in
the nature of another and the shortage of available manpower."
And further, "We do not think it determinative that the mine
had been developed to full capacity prior to 1944 or that the
equipment was purchased in an effort to maintain production.
The thin seam of coal, the greater amount of slate and other
refuse encountered as a result of the change in the character
of the seam being mined and the increasing difficulty of
obtaining manpower necessitated additional capital investment
as additional mechanization was required for the proper
working of the mine; and there is no reason why such
investment should be charged against the coal mined during the
current year instead of being amortized like other capital
investments made in the interest of economy and efficiency."
200 F.2d at 418-419. The court found that they "unquestionably
added to what the value of the mine would have been without
them and they decreased `the cost of production of mineral
units' * * *."
In the case at bar, it was not the removal of gypsum that
caused the need for the air and escape hatch, except to the
extent that its removal caused the plaintiff to proceed into
the area crossed by the railroad tracks. It appears from the
testimony, although it was not specifically so stated, that
whether the tracks had been near the original workings of the
mine, or distant therefrom, a hatch on the far side of these
tracks was required for safety by state mining law. It was
not, therefore, merely the distance of the working places from
the location of other hatches which caused the need for this
facility. Apparently, the hatch would not have been required
to serve this area had it not been for the presence of the
As noted in both Marsh Fork and Harman, items of equipment
with a useful life of more than one year ordinarily are
chargeable to capital account and recovered through
depreciation, because they add to the value of the business.
The air and escape hatch clearly added to the value of the
mine in permitting operations to proceed in the area beyond
the tracks. Additional capital investment was required to
provide for the safety of the men working in that area.
It is true that if this hatch had been required solely
because of the distance of the workings from hatches serving
areas worked earlier, it could be expensed as a receding face
item. Roundup Coal Mining Co. v. Commissioner, 20 T.C. 388
(1953). In that event, it would not be regarded as adding
value to the mine, for under the considerations set forth in
Marsh Fork, where the expenditure is necessitated by the
removal or ore, the facility contributes no balance of
economic value to the mine. Those considerations, however, are
Plaster City, California Mine
1. 1952 purchase of a new power shovel: $75,103.
2. 1953 expenditure to convert a churn-type drill
to a wagon-type drill: $4,248.
The plaintiff's mine at Plaster City, California, is an open
pit mine or quarry, employing a bench method of mining. In
1945, and for several years thereafter, the excavation
proceeded at the "toe" of the mountain or hill of gypsum, and
one shovel was employed to pick up and load into trucks the
gypsum blasted away from the face. In 1951, a second face was
opened at a level higher than the original floor level, and in
years several different faces, or benches, were opened. In
1952, a second shovel was purchased, at a cost of $75,103.
After the bench operation commenced, the original shovel had
to spend a lot of time in establishing benches, and it had to
be moved from one bench to the other. A second shovel was
therefore required to compensate for the time so lost, and to
maintain the normal output of the mine.
There were two reasons why a change was made from the single
face operation to a bench operation. First, state mining law
limits the height of the face which can be carried, for
reasons of safety of operation. Second, the floor of the
deposit had an upward slope. The change to a bench operation
was in part in anticipation of this rise in the floor of the
In 1953, a churn drill which had been used at this mine was
converted to a wagon-type drill. Prior to 1953, the churn
drill was used to drill holes down into the gypsum. The holes
were then loaded with explosive and the material thereby
blasted off of the working face. The force of the explosive
plus the fall of material from a considerable height broke the
rock up into the desired size for loading with the shovel. In
1953, the faces being worked were no longer 50 to 100 feet
high, but were 25 to 30 feet high. To maintain the same ratio
of explosive to tons of rock broken, and to get the same
fragmentation of the material at this reduced height, it was
necessary to drill smaller diameter holes and to drill them
closer together. The churn drill could not accomplish these
objectives, hence one was converted to a wagon-type drill,
suitable for this purpose, at a cost of $4,248.
The expenditures for the power shovel and drill conversion
fail to qualify as receding face expenditures. They were not
necessitated solely by the recession of the working faces of
the mine, but rather were required by the need to convert from
a single face to a bench operation when the single face became
too high to mine safely as one face, and to anticipate a rise
in the floor of the deposit.
The rationale of the Harman decision, as discussed above,
applies to these expenditures. In Harman, special equipment
was required to work a thin seam of coal encountered in the
mining. Here, additional equipment was needed to work the face
when it became too high to carry as a single face.
In addition, it should be noted that in the Harman case, the
court denied as expense items certain Joy loaders and cutting
machines which were added to the mine as the working faces
scattered and became farther apart from one another. The Tax
Court stated in its findings of fact, set forth in footnote 1
of the Harman decision, 200 F.2d at 416-417: "In so far as the
cutting and loading machines * * * are concerned, it makes no
difference how far the tipple is located from the working
place in the mine. The distance between two working sections
is determinative of the number of cutting and loading machines
The shovel here claimed by the plaintiff, like the equipment
described by the Tax Court, was required because of the
inefficiency of using only one shovel on more than one face.
Recession of the face away from the working plant did not
cause the need for the shovel. It was required in the interest
of economy and efficiency, to avoid moving one shovel back and
forth between the faces, and not solely because of the
recession of the working faces of the mine away from the plant
of the operator.
It should be noted, although the plaintiff did not rely upon
these decisions, that in West Virginia-Pittsburgh Coal Co. v.
Commissioner, 24 B.T.A. 234 (1931), and W.M. Ritter Lumber Co.
v. Commissioner, 30 B.T.A. 231 (1934), equipment required to
avoid shifting machines on hand from one face to another, as
the working faces became scattered, was allowed to be
expensed. These cases, in this respect, seem inconsistent with
Harman. The Harman case, however, seems the better authority.
As to the drill conversion, this expenditure is similar to
that in Harman required where the petitioner's regularly used
equipment was inappropriate for use on a thin seam of coal.
The churn-type drill was inappropriate for working a short
Fort Dodge, Iowa Mine
1. 1952 expenditure for construction of a new
2. 1952 purchase of a new tractor carry-all:
3. 1953 expenditure for construction of a new
powder magazine: $3,119.
The plaintiff's mine at Fort Dodge, Iowa, is an open pit
mine or quarry. The gypsum deposit is a flat bed with 40 to 50
feet of overburden or earth cover, which is stripped off to
mine the gypsum. In 1952, the working face of the mine was
advancing in the direction of a powder magazine and a
roundhouse located on the overburden. These had to be removed
to allow the continued advance of the face. At the time of
their removal, the structures were still good buildings, with
ten or fifteen years of life remaining. It was considered more
economical, however, to replace these buildings with new ones
in different locations than to tear them down and move them
A new roundhouse was constructed in 1952 at a cost of
$26,893, and a new powder magazine was constructed in 1953 at
a cost of $3,119.
The expenditures for construction of the new roundhouse and
powder magazine were necessary to maintain the normal output
of the mine solely because of the recession of the working
faces of the mine, and did not increase the value of the mine,
decrease the cost of production of mineral units, or represent
an amount expended in restoring property or in making good the
exhaustion thereof for which an allowance is or has been made.
These facilities merely replaced former like facilities which
had to be torn down because of the recession of the working
face. They qualify as receding face deductions under the
It seems clear that if the recession of the working face had
been away from these buildings, instead of toward them, moving
them or building new ones closer to the face would have
qualified as receding face expenditures. Like the air shaft
held deductible in Roundup Coal Mining Co. v. Commissioner,
20 T.C. 388 (1953), and the portable air compressor held
deductible in Tennessee Consolidated Coal Co. v. Commissioner,
24 B.T.A. 369 (1931), these buildings were necessary to serve
the working faces of the mine. The result should not logically
be different where the face has receded in the direction of
these buildings, rather than away from them.
The new buildings were comparable to the old ones in size
and structure, not significantly improved facilities. They
served a new face in addition to the old one; there is no
indication, however, that they were larger or more expensive
to construct by reason of their serving an additional face.
In 1952, a tractor carry-all, or earth-moving machine, was
purchased for this mine, because it became necessary in that
year to open a second working face in order to continue with
the normal mining out of the deposit. The second face was
located in 1952 at a point near the original location of the
first face. Both of these faces are still being worked.
The purchase of this carry-all fails to qualify as a
receding face deduction. The plaintiff has failed to establish
with respect to this expenditure (1) that it was necessitated
solely because of the recession of the working faces of the
mine, and (2) that its purchase was merely to maintain the
normal rate of output of the mine, and did not increase the
value or output of the mine.
There is no testimony in the record which indicates that
this purchase was necessitated by the recession of working
faces away from the working plant of the mine. In the
plaintiff's reply brief, it is stated that if the first face
receded from its original position, the earth-moving machine
which served the first face could have served the second face
as well, with no loss of efficiency; but that in light of the
recession of the first face, moving this machine back and
forth between the two faces would have resulted in a loss of
time and production. There is no testimony in the record,
however, concerning the earth-moving machine to which the
plaintiff has referred in its brief, or suggesting that this
machine could have served both faces. Moreover, it appears
under the Harman decision that where additional machinery is
required because of the "scattering" of the working faces, the
acquisition of additional machinery for such faces is not
properly a receding face expenditure.
The plaintiff's witness Appleyard testified that it was
necessary to open the second working face, for which the
tractor was acquired, in order to continue the normal mining
out of this deposit; however, he also stated that from the
time the second face was opened in 1952, both the first and
second faces have continued to be worked. There is no
indication that the gypsum mined on the first face was being
depleted or that production from that face was declining.
Moreover, plaintiff's exhibit 8, showing figures concerning
the Fort Dodge mine, shows a yearly increase in actual
production from this mine from 1950 through 1955, a decrease
in cost per ton of production for this period, and an increase
in tons per man hour of production from 1951 through 1955. The
evidence taken together thus fails to establish a prima facie
case that the opening of the second face did not increase the
output of the mine or its value.
Southard, Oklahoma Mine
1. 1952 purchase of a new portable air
The plaintiff's mine at Southard, Oklahoma, is an open pit
mine or quarry. Compressed air for the working faces was
provided at a compressor station. In 1952, the "Keenes working
trace" in the upper strata of the gypsum deposit at this mine
was being depleted, and it was necessary to open a second face
in this strata at a point about a mile and a quarter distant
from the older face. In order to provide compressed air for
drilling in the new area, it was necessary either to build a
pipeline to carry air from the compressor station or to locate
a portable compressor at the new working face. A portable air
compressor was purchased to serve the new face, at a cost of
This expenditure was necessary to maintain production solely
because of the recession of the working faces of the mine, and
did not increase the value of the mine, decrease the cost of
production of mineral units, or represent an amount expended
in restoring property or in making good the exhaustion thereof
for which an allowance is or has been made.
This expenditure is similar to the expenditure for a new ore
pocket, hoist motor, and skips at the plaintiff's Plasterco
mine, in that it was necessitated when the normal progress of
the mining out of the deposit led to the opening of a new face
at a greater distance from the working plant of the mine. The
acquisition of the portable air compressor was to "bring
forward the working plant of the operator," and it was
occasioned by the prior removal of gypsum.
Midland, California Mine
1. 1953 purchase of a new portable air
There is no evidence in the record concerning the purchase
or purpose of the portable air compressor claimed for the
Midland mine. It therefore must be denied as a receding face