United States v. Dakota-Montana Oil Co.

Respondent, a North Dakota corporation, in making its tax return of income derived from its operation of oil wells in 1926, claimed a deduction from gross income of a depreciation allowance on account of the capitalized costs of preliminary development and drilling. The Commissioner refused to allow the deduction claimed, ruling that it was for depletion, not depreciation, and was therefore included in the statutory depletion allowance of 27%% of the gross income, which the respondent had also deducted.. §§ 204. (c), 234 '(a) (8), Revenue Act of 1926, c. 27, 44 Stat. 9, 16, 41. Having paid…