Transco Exploration Co. v. Commissioner
United States Tax Court
Petitioner was engaged in oil and gas exploration and production and was liable for windfall profit tax. Held, in calculating the net income limitation on windfall profit under sec. 4988, I.R.C., it was proper for petitioner to exclude from "taxable income from the property" a portion of lease bonuses which it paid and it was also proper for petitioner to capitalize a like amount in calculating "cost depletion" solely for purposes of the net income limitation.
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Petitioner was engaged in oil and gas exploration and production and was liable for windfall profit tax. Held, in calculating the net income limitation on windfall profit under sec. 4988, I.R.C., it was proper for petitioner to exclude from "taxable income from the property" a portion of lease bonuses which it paid and it was also proper for petitioner to capitalize a like amount in calculating "cost depletion" solely for purposes of the net income limitation. Woods Investment Co. v. Commissioner, 85 T.C. 274 (1985), followed.
1Opinion of the Court
OPINION
GOFFE, Judge:
The Commissioner determined a deficiency of $789,567.97 in petitioner’s windfall profit tax under section 49861 for the taxable year 1980. In an amendment to answer, respondent increased petitioner’s deficiency by $55,493.85, based on an alternative argument.
The parties submitted this case fully stipulated pursuant to Rule 122. The stipulation of facts and exhibits attached thereto are incorporated herein by this reference.
The issue is whether petitioner properly calculated the net income upon which its net income limitation (also referred to as NIL) was applied.…
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