Retsal Drilling Co. v. Commissioner
United States Board of Tax Appeals
Petitioner entered into contracts with drilling contractors for the drilling and completing of oil and gas wells on its properties for a stipulated price per well.
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Petitioner entered into contracts with drilling contractors for the drilling and completing of oil and gas wells on its properties for a stipulated price per well. The contractors agreed to do all of the drilling and to furnish all material and equipment, except that petitioner was to furnish some of the supplies required for drilling operations and some items of equipment, to swab certain wells in, and in some cases to furnish a man to supervise the drilling of the sand and the running of the casing. Held, that petitioner is not entitled to deduct as intangible drilling and development costs…
1Opinion of the Court
*1061OPINION.
TuRNee :
That a completed oil well is a capital item seems to be well settled, Grison Oil Corporation v. Commissioner, 96 Fed. (2d) 125; Harris Co. v. Commissioner, 112 Fed. (2d) 76, affirming 38 B. T. A. 383; O-W-R Oil Co., 35 B. T. A. 452; Old Farmers Oil Co., 12 B. T. A. 203; and Hughes Oil Co. v. Bass, 62 Fed. (2d) 176; certiorari denied, 289 U. S. 726, and certainly the rule is general, if not fundamental, that the cost of a capital asset, whether expended as purchase price or for construction, creation, or development, must be capitalized and may not be deducted as expense in…
2Cited by5 opinions
- Hedges v. CommissionerUnited States Tax Court · 1964
- Retsal Drilling Co. v. CommissionerCourt of Appeals for the Fifth Circuit · 1942
- Hedges v. CommissionerUnited States Tax Court · 1964
- Laster v. CommissionerUnited States Board of Tax Appeals · 1940
- Retsal Drilling Co. v. CommissionerUnited States Board of Tax Appeals · 1940