G. B. R. Oil Corp. v. Commissioner

Petitioner was a corporation engaged in the development and operation of oil leases. In 1934 it purchased several such leases with money which it borrowed from a bank. The bank required petitioner to execute deed of trust liens on the properties to secure the bank for its indebtedness and also required petitioner to execute written assignments to the bank of all proceeds from the oil produced on the leases. In the taxable year all receipts from oil produced on the properties were paid to the bank and the bank in turn advanced certain amounts to petitioner to pay operating expenses and certain…