This appeal involves federal income taxes (a deficiency assessment of $22,-773.22 paid in 1946). Appellant sued for a refund after the Commissioner had rejected a claim therefor, and the lower court sustained the assessment and dismissed appellant’s action. This appeal followed. The findings, conclusions and order for judgment of the lower court are set out in Talache Mines, Inc., v. United States, D.C., 108 F.Supp. 25.
A preliminary reference to the facts will be helpful. In 1917 and 1918, appellant acquired the Idaho mining properties referred to in the lower court’s opinion but did not place these properties in production until 1922. It operated them until 1926 and thereafter leased them until the year 1941. Appellant’s claim is that in 1942 it permanently abandoned and discarded these properties because unforeseen changes in business conditions terminated their usefulness and made them valueless to appellant. In its complaint below it averred that since this abandonment it has never used said properties in its (mining) business nor for any purpose, nor has any other person mined said property or removed mineral products therefrom.
Appellant claimed a deduction in its 1942 income tax return for loss result*493Ing from this asserted adandonment in that year, as provided in title 26 U.S. C.A. § 23(f).1 The sum of $50,000 was finally allowed as a 1942 loss, but the further claimed sum of $169,773.57 was disallowed and rejected by the Commissioner, and as a result of the dis-allowance and rejection of this larger portion of appellant’s claimed abandonment loss, the deficiency income tax above noted was assessed against appellant and collected.
On this appeal, appellant assails as error only one finding of fact (No. 9) of the lower court which reads as follows:
“That the plaintiff did not give any notice to the public at any time nor during the year in question, to wit, 1942, of his abandonment of the property, nor did plaintiff renounce the title or his interest in any of the unpatented mining claims nor do any affirmative act showing an abandonment of the mining claims, but retained title and exercised its claim and control over the property until the same was sold.”
Appellant separately assails as errors of law the lower court's Conclusions of Law Nos. 2 to 5, inclusive. We assume that appellant charges such errors because these Conclusions failed to declare that the 1942 acts of appellant referred to in Finding No. 6 were affirmative acts which legally constituted a bona fide abandonment of the mining property.
In support of its contention that the lower court erred in the above particulars, appellant urges that it is not necessary under federal law that, in order to constitute an abandonment, the taxpayer must divorce itself from all interest of value in the property or that the property become worthless in the year of abandonment. This being the ease, the property may be retained and later disposed of for salvage value, since the applicable law does not require complete severance or disposal of legal title of property before an abandonment loss may be claimed. This contention is advanced as a general proposition of law.
The Facts
Aside from one other witness whose brief testimony is not relevant to the issue of abandonment, Mr. Burroughs was the only witness testifying at the trial. He was president and general manager of appellant and since 1928 had been the owner of all of its capital stock. All of the corporate actions of appellant referred to below were performed by Burroughs for and on behalf of appellant, and he indicates as being its corporate action all that he did in respect to matters related to the claim of abandonment. He testified that the Talache mining property had shrunk in value up to 1942 to a point where it had become useless to the company; that it abandoned the mine by removal of equipment (after the fashion described by the lower court in Finding No. 6) and allowed it to cave in.
Burroughs further testified that a notice of abandonment was not posted in 1942, nor was such a notice published in any local newspaper in that year advising of the intention of appellant to abandon its mining property. He asserted that he did not “do any act” to show an “intention” of appellant to hold the property for mining purposes; he admitted that he was familiar with the provisions of federal statutes that permitted mining operators “to file a notice of intention to hold (unpatented claims) in lieu of assessment work”; he admitted that in 1942 (when he claimed that the mining property was abandoned) “we filed notice of intention to hold [the unpatented] mining claims,” and that in each of the succeeding years of 1943 and 1944 the same kind of no*494tice respecting these claims was filed. (These notices were filed with the County Recorder of Bonner County, Idaho in which County the claims were located, see Finding No. 7.) In its brief on appeal, appellant tells us that the “notices of intention” here referred to were filed “to hold the unpatented claims” — that “the reason for this action was to maintain the property intact in the effort to realize the salvage value through its recreational uses.” In this connection, Burroughs also testified that if appellant wanted to hold (retain) the unpatented claims it “would have to do the assessment work or file the intention.” He further testified that appellant “paid taxes on 18 patented claims for the years 1942 to 1945.”
In his testimony Burroughs assigned as a reason for filing the “notice of intention” in 1942 that “when we abandoned the mine I set up on the books at that time a $30,000.00 as the valuation on the property up there for the purpose, primarily, recreational and perhaps among the claims that were unpatented there were some that surrounded this home and the development around there that Mr. Armstead had made about a mile from the mine * * *. I wanted to hold [all of] the property altogether to make it available if I could and to see if I could get the value of the tax instead of on the books.” Apparently “this home” and the surrounding unpatented mining claims held by appellant represented a portion of the “interest” therein Burroughs wanted to retain after the claimed abandonment of the mining properties. He testified that this retention was not for any mining purpose but because the potential recreational worth of the home and site offered a chance for salvage through a later sale. This home along with the-patented and unpatented mining claims, of appellant, were subsequently sold for $30,000 in 1947.
While appellant averred in its complaint that no effort had been made (up. to the time of filing the complaint) to. recover minerals from the mine since its “abandonment”, the record does not. disclose how much value the purchaser who bought the home along with alL of the mining claims conveyed in 1947,. may have attributed to the mineral value of the mining claims it purchased in this transaction.2 The home here-involved was located on Lake Pend Oreille on unpatented mining claims, about one mile from the mine portal, and presumptively possessed some value-for recreational purposes.
With the foregoing background of facts not in serious dispute and clearly-shown by the record on appeal, the-parties appear to be in agreement that the ultimate issue for decision boils-, down to whether or not appellant legally “abandoned” its Bonner County mining properties in 1942. If it did, the-deficiency assessment was improperly^ made and appellant is entitled to recover judgment for the amount paid on this assessment, with interest from: date of payment.
Appellant’s Contention
Appellant’s brief clearly sets forth its; contentions and the authority therefor:.
“ * * * The sole issue now present in this case on appeal is, as it was in the lower court, whether or not appellant had abandoned its mining properties at Talache,. Idaho, in the year 1942 so as to. permit it to deduct the loss result*495ing therefrom, under the provisions of Title 26 U.S.C.A. See. 23(f.).
“The appellant claims the deduction of its loss resulting from its abandonment of the mine in the year 1942 under Title 26 U.S.C.A., Sec. 23(f.), which permits a deduction in computing income tax, as follows:
“ ‘In the case of a corporation, losses sustained during the taxable year and not compensated for by insurance or otherwise.’
“The regulation applicable to a deduction resulting from the abandonment of capital assets is Income Tax Eegulations III, Sec. 29.-23(e)-3, as follows:
“‘Sec. 29.23(e)-3. Loss of useful value. — When through some ■change in business conditions, the usefulness in the business of some or all of the capital assets is suddenly terminated, so that the taxpayer * * * discards such assets permanently from use in such business, he may claim as a loss for the year in which he takes such action the difference between the basis (adjusted * * *) and the salvage value of the property. This exception to the rule requiring a sale or other disposition of property in order to establish a loss requires proof of some unforeseen cause by reason of which the property has been prematurely discarded * *.’
“A general discussion of the law ■on abandonment is found in 5 Mer-tens, Law of Federal Income Taxation, in the following Sections:
“Sec. 28.17 ‘Loss may also be realized on the * * * permanent abandonment or discarding of an asset, such as buildings or machinery and equipment, or other assets, the loss being offset by the salvage value, if any. Of course, if salvage value, plus depreciation, exceeds the basis for the property, there will be no loss and there may be a taxable gain. In such cases a requirement that the loss be evidenced by a sale would be necessarily fictitious, it would not only not establish the occurrence of the loss but would even be misleading as to the real year in which the loss was actually sustained. As one court has said: “To extend the usual doctrine so far would serve only to allow a taxpayer to manipulate his loss.” ’
“Again at paragraphs 28.18 and 28.20 it is stated in part:
“ ‘What constitutes abandonment. There must be abandonment if this type of loss is to be allowed; continued use will vitiate the deduction. Whether there has been an abandonment of property depends upon the intention of the owner coupled with the act of abandonment, both to be ascertained from all the surrounding facts and circumstances.
" 'Generally speaking, there should be some overt act to indicate abandonment. The discontinuance of use is not equivalent to abandonment. * * * Furthermore, the fact that property with proper care might be kept in use indefinitely does not preclude the deduction. There is an abandonment where, due to a change in business conditions, a building cannot be used for the purpose for which it was specially designated and must be devoted to a radically different use, requiring costly alterations.’ ” (Italics ours.)
Discussion of the Issue
Appellant could maintain its interest in the property (on the unpatented claims) only so long as it did $100 worth of labor or improvements a year toward developing the mine, 30 U.S.C.A. § 28.3 *496Effective in 1942, this provision was amended (by section 28a) which allowed a mine claimant to maintain its interest in the unpatented mining claims by filing a declaration of desire to hold these mining claims. As the facts clearly show, in 1942, 1943 and 1944, appellant filed and caused to be recorded notices of desire to hold all of its unpatented mining claims. It seems clear that appellant thus hoped to circumvent the inconsistency between (1) declaring a desire to hold these claims (thereby retaining the legal right to possess and exploit them), and (2) its claim, for income tax purposes, that it had completely abandoned its entire mine and the minerals therein, as a result of which operation it had sustained a loss under I.R.C. Section 23(f), and Treasury Regs. Ill, 29.23(e)-3. Appellant’s position here and below is that while in the year 1942 it completely abandoned its mine, it could nevertheless lawfully retain complete dominion and control over, and/or legal right to, all of the surface of the land involved in all of the various claims, patented and unpatented, so that this entire surface area could be sold in later years for possible use as a sportsman’s resort.
In other words, its contention is that the recording of the declaration of desire to hold the unpatented mining claims and payment of taxes on the patented claims, as aforesaid, are acts not inconsistent with the claim that under 23(f) it totally abandoned the mine and minerals.
In the Memorandum Decision of the Lower Court, Judge Healy said:
“I have great difficulty in escaping the proposition that there cannot be said to have been an abandonment or discard of the subsurface mineral in 1942, as contemplated by the Regulations, in view of the admission of plaintiff’s president that declarations of intention to continue to hold the unpatented claims were filed subsequently for the years 1943 and 1944. This intention in-legal contemplation necessarily related to the claims as mineral-ground.” (Italics ours.)
The United States is the owner of the unpatented claims here involved. Appellant merely had the right to exploit the mineral wealth in such claims. Appellant cites no case and no authority for its unique claim that it can wholly abandon a mine and the minerals therein for income tax loss purposes for one tax year, and in the very same year (and following years) execute and file a declaration of desire to hold its unpatented mining claims. A valid mining claim (or claims) necessarily includes control over the surface of such unpatented claim or claims along with a legal right to remove the subsurface minerals. Appellant’s president stated that all of the ore which had been taken out of the mine had come from the unpatented claims.4 The major portion of appel*497lant’s tax basis came from expenditures on the development of the mine. We must assume that considerable of this development cost was necessarily expended on the unpatented claims since eoncededly all of the ore taken out was removed from these unpatented claims. It appears that at least the major portion of the value of the asset assertedly abandoned was within the unpatented claims which were the subject of the declarations of desire to hold.
Appellant has relied heavily upon the holding of a 1932 case, Colorado & Utah Coal Co. v. Commissioner, 26 B.T.A. 588, but we see no valid reason for parting company with the rationale of the Ninth Circuit cases cited in the reported opinion of the trial court. In the Colorado Coal case the company was allowed a claim for loss due to abandonment of a lower seam of coal. In that case the lower seam was set up as an individual accounting venture and asset, wholly separate and distinct from the surface and from the major vein, which two latter items were combined for accounting purposes. In the case at bar, appellant’s original cost basis for tax purposes made no distinction whatever between surface and subsurface values. And, more important, we have in the case at bar valid declarations of desire to hold all unpatented mining claims, and payment of taxes on the patented claims, which of course would spell out retention of all subsurface minerals. In the Colorado Coal case, the company kept the major vein of coal and continued to operate its mining property.
If, in the case at bar, appellant had engaged in an additional exploratory operation which was abandoned in 1942, we would be presented with a wholly different fact situation, for if it had elected to continue mining operations we would not have necessarily found an inescapable inconsistency between the repeated declarations of desire to hold the unpatented mining claims in 1942, 1943 and 1944 and the asserted abandonment of its entire mining operations in 1942. In the Colorado case, supra, the Court said:
“The existence of this seam [Wolf Creek] was known both to the petitioner and the mining section of the income tax unit at the time of the valuation of the Wadge seam, but in view of the known facts that the seam varied considerably in thickness and quality over the county, it was thought that there were insufficient data on file to warrant the assignment of any value to the coal [in Wolf Creek],
“In 1921 petitioner decided to prospect the Wolf Creek seam and for this purpose started a slope about 500 feet north of the Wadge opening * * *
“The surface of the coal property in question was not abandoned or sold by the petitioner, because it was required in the petitioner’s mining operations on the Wadge seam, and its value had been and was included as a factor in the establishment of the depletion rate on that seam.” (Italics ours.)
Thus as to the unpatented claims of Talache, the sum total of appellant’s interest was its right to fully exploit these claims for mining purposes. Aside from this right it had no tangible interest in the unpatented claims. Appellant could not “abandon” the mining aspects of these mining claims and thereafter keep them solely for resale for “recreational purposes.”5 Appellant’s interest in them *498represented only one “asset,” i. e., the right to fully exploit their mineral wealth.
As the lower court pointed out in its Memorandum Decision, the “declarations of intention to hold the unpatent-ed claims * * * in legal contemplation necessarily related to the claims as mineral ground.”
In a practical sense it is true that more than one form of property interest stems from the existence of valid mining claims. These forms of interest are primarily physical possession of the claims along with a legal right to remove the subsurface minerals. It is appellant’s theory that for tax loss purposes it may arbitrarily separate these two primary interests or rights by abandoning the mine beneath the surface, while retaining complete legal dominion over the surface area. But this assertion runs afoul of appellant’s affirmative act of filing declarations of desire to hold the unpatented mining claims during 1942, 1943 and 1944, which acts, in our view, necessarily spelled out a deliberate purpose to retain every form of interest and right of exploitation which the law then gave and could give to the lawful possessor of these unpatented mining claims. It will not do for appellant to say that in 1942 it legally abandoned the subsurface mine and minerals, and in the same breath assert (as it did) a lawful right to retention6 of every form of property interest that appellant possessed in these claims at the beginning of 1942, and which interest it had previously possessed in the land and in the subsurface minerals.
It is crystal clear from the record that appellant fully realized7 that to retain full control over the unpatented claims during 1942 it must either comply with § 28 or comply with the wartime alternative, § 28a and make and file a declaration of desire to hold these mining claims during the year here involved.
The lower court found in part (Finding No. 9, supra) that there was no abandonment. Under our Rule 52(a) of Civil Procedure, 28 U.S.C.A. “In all actions tried upon the facts without a jury * * * Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.” This crucial finding is not “clearly erroneous.”
Appellant’s theory is that it sustained loss for income tax purposes because it “abandoned” a business asset, viz., the mine and minerals in the year 1942. An abandonment consists of two elements (neither of which do we find to be present in the case at bar):
(1) an affirmative act indicating an abandonment, and
(2) an intent to abandon.
The undisputed facts in this case clearly show that appellant evinced a bald and undisguised intent to hold and it annually performed an affirmative act indicating a retention, when it executed *499and filed the notices of desire to hold its unpatented mining claims in and during the years 1942, 1943 and 1944. To this significant gesture it added the payment of taxes on the patented claims for the years 1942 to 1945.
The lower court was “clearly correct” in finding and concluding that there was no abandonment of assets so as to allow a loss under Internal Revenue Code, § 23 (f).
Judgment is affirmed.
. Section 23(f) of the Internal Revenue Code allows as deductions losses by corporations if sustained during the taxable year and if not compensated for by insurance or otherwise.
. The lower court found (Finding 8) that in 1947 appellant sold for recreational purposes all of the mining claims, both patented and unpatented, together with appellant’s interest in the buildings (the “home”) situated on appellant’s unpatont-ed claims, and in 1948 delivered a warranty deed to the purchaser for its 18 patented claims, and a quitclaim deed to its 44 unpatented claims, together with a bill of sale to the buildings, structures, and improvements (the “home” property) located on 2.07 acres of ground held by-appellant under a “Special Use” permit from a National Forest Reserve. This, finding is fully established as true by-tlie record and the testimony of B?ir-roughs.
. Pine Grove Nevada Gold Mining Co. v. Freeman, 1946, 63 Nev. 357, 171 P.2d 366, 376 is a ease which construed 30 U.S.C.A. § 28 and § 28a in connection with an action to quiet title to an unpatented mining claim which was assertedly lost *496because of non-compliance with § 28 or § 28a. In discussing § 28, the Nevada court said:
“The obligation of doing the annual assessment work is the obligation assumed by the locator óf a mining claim, as a condition of his right to hold and develop the claim. The government desires the development of its mineral resources, and, instead of leasing the property and requiring a payment of rent, requires, as compensation for the right to hold and develop the property and extract the fruits of such development, that the claimant perform annual assessment work. This involves labor and the expenditure of money, or its equivalent, for supplies. It is the price the claimant pays for his right of possession and exploitation.”
. Mr. A. H. Burroughs, Jr., testified as follows:
“The Court: Were they all adjoining claims? A. Some were patented and some were not, about half were patented claims.
“Q. And with respect to those, Mr. Burroughs, where was the mining done by the Talache Mines, that is, with respect to whether it was patented claims or not? A. All of the ore removed by the Talache came from the Little Joe, the vein outcropped on the Little Joe and the extension of the claim, they were not patented, they were unpatented claims.
“Q. They were unpatented? A. Xes.”
. Schlegel v. Hough, 1947, 182 Or. 441, 186 P.2d 516, 518, (Supreme Court of Oregon en banc, rehearing denied 188 P. 2d 358). This was a suit to quiet title to an unpatented placer mining claim in which the answer alleged that plaintiff had forfeited the claim by failing to perform assessment work or annual labor thereon (§ 28) or filing notice of intention to hold the mining claim (§ 28a). The court said:
“The required annual labor must be such as tends to develop the claim or Tt-facilitate the extraction of minerals there*498from. 36 Am.Jur., Mines and Minerals, section 119. The question to be considered is whether or not the work was done in good faith ‘for the purpose of working, prospecting or developing the mining ground embraced in the location, or for the purpose of facilitating the extraction or removal of the ore therefrom.’ ”
. MacDonald v. Cluff, 68 Ariz. 369, 206 P.2d 730, 732 was a case construing § 28a, the relief provision enacted during the war which allowed owners of unpatented mining claims to file declarations of intent to hold mining claims in lieu of doing the $100 worth of labor or development. The court said of the declaration under § 28a:
“The essentials are good faith, an absence of fraud or deceit, and no intention to abandon the claim."
. (Testimony of A. H. Burroughs, Jr.)
“The court: In the absence of filing of the notice of intention to hold you would have to go ahead and do the assessment work? A. We could have, yes, but we would not have to do it.
“Langroise: But to retain the claims you would? A. Yes, if we wanted to hold it we would have to do the assessment woi'k or file the intention.”