Lyons v. Commissioner
United States Tax Court
1. Upon the "pulling" or abandonment of an oil well, petitioner's loss is determined by adjusting its cost basis for depletion allowable, as well as for depreciation allowable. 2. Where petitioner owned a leasehold and has drilled several oil wells thereon, upon the abandonment of one of the wells in the taxable year, leaving other producing wells on the leased tract, he is not entitled to treat the single well so abandoned as a separate property, but he must treat the…
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1. Upon the "pulling" or abandonment of an oil well, petitioner's loss is determined by adjusting its cost basis for depletion allowable, as well as for depreciation allowable. 2. Where petitioner owned a leasehold and has drilled several oil wells thereon, upon the abandonment of one of the wells in the taxable year, leaving other producing wells on the leased tract, he is not entitled to treat the single well so abandoned as a separate property, but he must treat the entire leased parcel as a single mineral property.
1Opinion of the Court
OPINION.
Van Fossan, Jvdge\
In the first issue the petitioner contends that in computing his loss on the “pulling” or abandonment of his oil wells, such loss must not be reduced by the amount of the depletion allowable thereon. He bases his position on the argument that “Congress intended this tax free return (a return of capital in excess of the statutory depletion allowance of 27% per cent, if such excess occurs) by allowance of depletion, as an incentive payment to continue drilling operations, and that if the excessive depletion iú the circumstances assumed above is not used to determine a…
2Cases cited3 opinions
- Burnet v. Thompson Oil & Gas Co.Supreme Court of the United States · 1931
- Berkshire Oil Co. v. CommissionerUnited States Tax Court · 1947
- New Creek Co. v. LedererCourt of Appeals for the Third Circuit · 1924
3Cited by4 opinions
- Winnsboro Granite Corp. v. CommissionerUnited States Tax Court · 1959
- American Smelting and Refining Company — Consolidated v. The United StatesUnited States Court of Claims · 1970
- Lyons v. CommissionerUnited States Tax Court · 1948
- Winnsboro Granite Corp. v. CommissionerUnited States Tax Court · 1959