Maddrix v. Commissioner
United States Tax Court
Petitioner owned an undivided interest in a coal mining venture that had made an election under sec. 761(a), I.R.C. 1954. He reported his income from the venture on the accrual method. In 1977, participants in the joint venture (sublessees) entered into a sublease agreement with Olentangy Resources, Inc. (sublessor), for the extraction of coal, whereby sublessees agreed to pay an "annual minimum royalty" each year during the term of the sublease.
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Petitioner owned an undivided interest in a coal mining venture that had made an election under sec. 761(a), I.R.C. 1954. He reported his income from the venture on the accrual method. In 1977, participants in the joint venture (sublessees) entered into a sublease agreement with Olentangy Resources, Inc. (sublessor), for the extraction of coal, whereby sublessees agreed to pay an "annual minimum royalty" each year during the term of the sublease. Upon commencement of the sublease, sublessees were required to execute nonrecourse notes for a large portion of the total "annual minimum…
1Opinion of the Court
OPINION
Sterrett, Judge:
In a notice of deficiency dated March 9, 1981, respondent determined a deficiency of $67,900.51 in petitioners’ 1977 Federal income tax.
Respondent has filed a motion for partial summary judgment pursuant to Rule 121, Tax Court Rules of Practice and Procedure.1 The issues raised in respondent’s motion are (1-) whether certain amounts paid2 by petitioners in 1977 in the form of cash plus a nonrecourse promissory note constitute "advanced minimum royalties” within the meaning of section 1.612-3(b)(3), Income Tax Regs.; and (2) if so, whether petitioners may deduct in 1977…
2Cases cited3 opinions
- United States v. SullivanSupreme Court of the United States · 1927
- Jacklin v. CommissionerUnited States Tax Court · 1982
- Wing v. CommissionerUnited States Tax Court · 1983
3Cited by32 opinions
- Thomas v. CommissionerUnited States Tax Court · 1985
- Capek v. CommissionerUnited States Tax Court · 1986
- Seaman v. CommissionerUnited States Tax Court · 1985
- Ferrell v. CommissionerUnited States Tax Court · 1988
- Oneal v. CommissionerUnited States Tax Court · 1985
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