Houston Production Co. v. United States

HUTCHESON, Circuit Judge.

Plaintiff, in 1924, made a payment to one of its officers on account of'services which, though rendered in past years, did not become an obligation of the company until voted by the directors in this year. In its income tax return it took credit for this amount as an ordinary and necessary expense, and in arriving at its net income from its producing properties for the purpose of discovery depletion, it allowed. 76 per cent, of this amount as an expense of those properties, and as such deducted it from its gross income. The commissioner rejected the item altogether as…