Hugoton Production Company v. The United States

REED, Justice (Ret.),

sitting by designation.

This case presents a novel and difficult question relating to the means by which a natural gas producer must compute its percentage depletion allowance under sections 23(m) and 114(b) (3) of the Internal Revenue Code of 1939, 1 the corresponding and similar provisions of the 1954 Code, sections 611 and 613, 2 and the regulations issued pursuant to these sections. The precise question has been considered only once before, by the Tax Court, in Shamrock Oil & Gas Corp. v. Commissioner, 35 T.C. 979, 1028-1040 (1961).

Section 613 permits a taxpayer…