Cline v. Commissioner
United States Tax Court
In consideration for the negotiation of certain coal leases on behalf of the operator, petitioners acquired royalty interests in those leases. Subsequently, petitioners and the operator entered into a second contract whereby, in lieu of a royalty on coal mined from the specific leases, petitioners would receive a lesser royalty on all the coal handled by the operator.
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In consideration for the negotiation of certain coal leases on behalf of the operator, petitioners acquired royalty interests in those leases. Subsequently, petitioners and the operator entered into a second contract whereby, in lieu of a royalty on coal mined from the specific leases, petitioners would receive a lesser royalty on all the coal handled by the operator. Held, the second contract resulted in the sale or exchange of the royalty interests acquired by petitioners under the original contract; under the second contract, the petitioners did not retain an economic interest within the…
1Opinion of the Court
OPINION
Quealy, Judge:
Respondent determined the following deficiencies in petitioners’ Federal income taxes:
Petitioners Year Deficiency
Herbert B. and Brisy Cline 1967 $1,817.19
1968 3,433.24
1969 7,231.39
1970 7,373.83
1971 6,737.83
John C. and Mildred Cline. 1967 3,843.27
1968 4,258.55
1969 7,954.55
1970 6,475.06
1971 6,476.27
The only issue remaining for decision is whether the royalty payments received by petitioners from Wolf Creek Collieries Co. during the years 1967 through 1971 are to be taxed as capital gains rather than ordinary income under section 631(c),1 or in the alternative, sections 1202…
2Cases cited9 opinions
- Palmer v. BenderSupreme Court of the United States · 1932
- Commissioner v. Southwest Exploration Co.Supreme Court of the United States · 1956
- Paragon Jewel Coal Co. v. CommissionerSupreme Court of the United States · 1965
- Earl Vest and Fay Vest, Petitioners-Appellees-Cross v. Commissioner of Internal Revenue, Respondent-Appellant-CrossCourt of Appeals for the Fifth Circuit · 1973
- Vest v. CommissionerUnited States Tax Court · 1971
4 more not listed; retrieve them via the Exa API.
3Cited by4 opinions
- William H. Zuhone, Jr. And Audra M. Zuhone v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1989
- Herbert B. Cline, Jr., and Brisy Cline, John C. Cline and Mildred Cline v. Commissioner of Internal RevenueCourt of Appeals for the Sixth Circuit · 1980
- Cline v. CommissionerUnited States Tax Court · 1977
- Zuhone v. CommissionerUnited States Tax Court · 1988