Farwell v. Commissioner
United States Tax Court
1. The petitioners, owners of an oil lease, assigned all their right, title, and interest in the lease to an oil operator, reserving, however, an overriding royalty and 25 per cent of all oil, gas, and other hydrocarbons produced after the assignee made deductions for royalties, overriding royalties, drilling and development costs, and operating expenses.
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1. The petitioners, owners of an oil lease, assigned all their right, title, and interest in the lease to an oil operator, reserving, however, an overriding royalty and 25 per cent of all oil, gas, and other hydrocarbons produced after the assignee made deductions for royalties, overriding royalties, drilling and development costs, and operating expenses. Held, that the 25 per cent interest retained by the petitioners was a net profits interest, and that they are not entitled to depletion deductions based upon 25 per cent of the gross production. 2. Held, that an amount paid to a title…
1Opinion of the Court
Atkins, Judge:
The respondent determined deficiencies in income tax and additions to tax as follows:
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The principal issue in each case is whether the petitioners are entitled, under their assignment of their interest in a lease, to depletion computed upon the basis of gross production (after deduction of royalties) or upon net profits payable to them. A further issue presented in Docket Nos. 71041, 71042, and 71043 relates to the deducti-bility of amounts paid to a title insurance company for an examination of deeds and records relating to property lines and for a title insurance…
2Cases cited17 opinions
- Burton-Sutton Oil Co. v. CommissionerSupreme Court of the United States · 1946
- Courtney v. CommissionerUnited States Tax Court · 1957
- Bowers v. LumpkinCourt of Appeals for the Fourth Circuit · 1944
- Television Industries, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1960
- Commissioner of Internal Rev. v. JS Abercrombie Co.Court of Appeals for the Fifth Circuit · 1947
12 more not listed; retrieve them via the Exa API.
3Cited by31 opinions
- Pessin v. CommissionerUnited States Tax Court · 1972
- Estate of Campbell v. CommissionerUnited States Tax Court · 1971
- Reily v. CommissionerUnited States Tax Court · 1969
- Gumm v. CommissionerUnited States Tax Court · 1989
- Daugherty v. CommissionerUnited States Tax Court · 1982
26 more not listed; retrieve them via the Exa API.