Stephen A. Keller and Ethel L. Keller v. Commissioner of Internal Revenue

JOHN R. GIBSON, Circuit Judge.

This case presents the issue of whether intangible drilling and development costs (IDC) prepaid by taxpayer Stephen A. Keller in 1973 are deductible in that year rather than in later years when the goods and services are rendered. The issue essentially concerns timing; the deductibility of the IDC is not in dispute. In resolving this issue the tax court, sitting as a whole, weighed three considerations: (1) whether the expenditure was a payment or a deposit, (2) whether the prepayment was made for a business purpose or for tax avoidance, and (3) whether the…