Buffalo Eagle Mines, Inc. v. Commissioner
United States Board of Tax Appeals
Petitioner, having acquired a fully equipped and operating coal property in exchange for stock and an agreement to pay 10 cents a gross ton on all coal produced, paid $23,308.41 during the taxable period pursuant to its agreement.
Read the full summary
Petitioner, having acquired a fully equipped and operating coal property in exchange for stock and an agreement to pay 10 cents a gross ton on all coal produced, paid $23,308.41 during the taxable period pursuant to its agreement. Held, petitioner's payment, being an operating expense based on production, is deductible as royalty, or as an ordinary and necessary business expense within the meaning of section 23(a), Revenue Act of 1928; held, further, the contractual liability of petitioner was not a scheme devised to distribute corporate earnings under the guise of royalty payments.
1Opinion of the Court
*846OPINION.
Arnold:
Part of the $46,616.82 payment made by petitioner was made pursuant to the terms of the Altizer lease, and part thereof was pursuant to the agreement between petitioner and its assignor, Lem-kuhl. Each of these instruments obligated the petitioner to pay 10 cents a ton upon coal produced. The lease expressly characterizes the payments of 10 cents a ton therein provided for as royalties or rents, and there is no dispute between the parties as to the tax significance of the payments to the original lessors. The petitioner has deducted them as “Rent on Business Property —…
2Cases cited8 opinions
- Burnet v. HarmelSupreme Court of the United States · 1932
- Palmer v. BenderSupreme Court of the United States · 1932
- Lynch v. Alworth-Stephens Co.Supreme Court of the United States · 1925
- Thomas v. PerkinsSupreme Court of the United States · 1937
- Bankers Pocahontas Coal Co. v. BurnetSupreme Court of the United States · 1932
3 more not listed; retrieve them via the Exa API.
3Cited by4 opinions
- Surloff v. CommissionerUnited States Tax Court · 1983
- Eastern Gas & Fuel Associates v. CommissionerCourt of Appeals for the First Circuit · 1942
- Buffalo Eagle Mines, Inc. v. CommissionerUnited States Board of Tax Appeals · 1938
- Surloff v. CommissionerUnited States Tax Court · 1983