Butler v. Commissioner
United States Board of Tax Appeals
In 1934 petitioner leased mineral rights from X, with an option to purchase the rights in 5 years for $5,000. In 1937 petitioner executed an agreement with Y giving him a 90-day option to buy the mineral rights covered by the 1934 lease and option agreement for $36,000. The evidence fails to show that petitioner agreed to sell his option to Y. The agreement with Y refers to a sale of mineral rights only. Y exercised his option.
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In 1934 petitioner leased mineral rights from X, with an option to purchase the rights in 5 years for $5,000. In 1937 petitioner executed an agreement with Y giving him a 90-day option to buy the mineral rights covered by the 1934 lease and option agreement for $36,000. The evidence fails to show that petitioner agreed to sell his option to Y. The agreement with Y refers to a sale of mineral rights only. Y exercised his option. Petitioner paid $5,000 to X. Thereafter Y received a deed to the mineral rights. Held, the transactions in 1937 resulted in purchase of mineral rights by petitioner…
1Opinion of the Court
*1007OPINION.
HaRRON :
The parties present the question for determination on the premise that the sale of a capital asset is involved. They are in *1008agreement tliat petitioner realized a gain in 1987 of $25,950. Respondent computed the gain, in determining the deficiency, as follows:
Amount realized on sale — September, 1037-$36,000'
Purchase price of mineral rights — September, 1937-$5,000
Development costs- 5, 050
- 10,050
Capital gain as corrected (100 percent taxable since the property was not held more than one year)-$25,950
Petitioner reported capital gain of $15,570, 60 percent of $25,950, as gain…
2Cases cited3 opinions
- Helvering v. San Joaquin Fruit & Investment Co.Supreme Court of the United States · 1936
- Kincaid v. McGowanCourt of Appeals of Kentucky · 1887
- Walker v. EdmundsonSupreme Court of Georgia · 1900
3Cited by10 opinions
- Herman J. Miller v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1961
- Louis D. Blick and Anne Blick v. Commissioner of Internal RevenueCourt of Appeals for the Third Circuit · 1959
- Anders v. CommissionerUnited States Tax Court · 1977
- Barber v. United StatesDistrict Court, D. Minnesota · 1953
- Chemetron Corporation, a Delaware Corporation v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1962
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