Harper Oil Company, a Corporation v. United States

BLACKMUN, Circuit Judge.

We are concerned here with the issue whether a taxpayer’s cost of surface-casing for a producing Oklahoma oil well may be expensed, pursuant to § 263(c) 1 of the Internal Revenue Code of 1954 and the implementing regulation, or whether that cost must be capitalized and recovered only through depreciation. The taxpayer expresses the issue with a slightly different, but entirely appropriate, emphasis: “The single issue involved in this appeal is whether or not the option to expense drilling costs applies to non-salvageable surface-casing.” The taxpayer, Harper Oil…