Berkshire Oil Co. v. Commissioner
United States Tax Court
1. The taxpayer corporation acquired leases on several properties in consideration of cash, the drilling of oil wells within a fixed time, and the payment of a royalty on oil or minerals extracted. It incurred intangible drilling and development costs which it deducted as expenses.
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1. The taxpayer corporation acquired leases on several properties in consideration of cash, the drilling of oil wells within a fixed time, and the payment of a royalty on oil or minerals extracted. It incurred intangible drilling and development costs which it deducted as expenses. Such costs held not deductible as expenses because part of the cost of the lease acquired and hence a capital investment. 2. The option given by section 19.23(m)-16, Regulations 103, to treat such costs as expense or capital, held inapplicable to costs incurred in drillings which are made in performance of a…
1Opinion of the Court
OPINION.
Johnson, Judge-.
1. — By section 19.23 (m)-16, Regulations 103, a taxpayer engaged in the development and operation of oil and gas wells is given an option to charge intangible drilling and development costs to capital or to expense. Acting under this section, petitioner elected to charge such costs to expense, and on its income tax returns for 1941 and 1942 it deducted those incurred in drilling the producing wells on the Ward and Yule leases in those respective years. The Commissioner disallowed the deductions and here defends his action on the ground that the option is not…
2Cases cited7 opinions
- Lee v. GiauqueSupreme Court of Louisiana · 1923
- F. H. E. Oil Co. v. CommissionerUnited States Tax Court · 1944
- Manahan Oil Co. v. CommissionerUnited States Tax Court · 1947
- Anvil Hydraulic & Drainage Co. v. CodeCourt of Appeals for the Ninth Circuit · 1910
- Edwards v. CarrLouisiana Court of Appeal · 1931
2 more not listed; retrieve them via the Exa API.
3Cited by36 opinions
- James D. Kennedy, Jr. And Dorothy H. Kennedy, and Cherokee Warehouses, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Sixth Circuit · 1982
- Union Stock Farms v. Commissioner of Internal Revenue, Commissioner of Internal Revenue v. Nathan MillerCourt of Appeals for the Ninth Circuit · 1959
- Hedges v. CommissionerUnited States Tax Court · 1964
- Amherst Coal Co. v. CommissionerUnited States Tax Court · 1948
- Drew v. CommissionerUnited States Tax Court · 1949
31 more not listed; retrieve them via the Exa API.