Day v. Commissioner
United States Tax Court
Petitioners received lump-sum cash payments in consideration of their executing agreements conveying, for a period of 25 years renewable for an additional 20 years, the rights to all of the water underlying their lands. The aquifer containing the water is not subject to recharge, and the purchaser could, and intended to, extract all the water.
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Petitioners received lump-sum cash payments in consideration of their executing agreements conveying, for a period of 25 years renewable for an additional 20 years, the rights to all of the water underlying their lands. The aquifer containing the water is not subject to recharge, and the purchaser could, and intended to, extract all the water. Held, petitioners did not retain an economic interest in the water in place, the agreements effected sales rather than leases, and the consideration received by petitioners is taxable as capital gain rather than ordinary income.
1Opinion of the Court
Don C. Day and Catherine Day, Petitioners v. Commissioner of Internal Revenue, Respondent; Dan Day and Roberta Day, Petitioners v. Commissioner of Internal Revenue, Respondent
Day v. Commissioner
Docket Nos. 3968-68, 3978-68
United States Tax Court
54 T.C. 1417; 1970 U.S. Tax Ct. LEXIS 104; 36 Oil & Gas Rep. 555;
June 25, 1970, Filed
Decisions will be entered for the petitioners.
Petitioners received lump-sum cash payments in consideration of their executing agreements conveying, for a period of 25 years renewable for an additional 20 years, the rights to all of the water underlying their lands. The…
2Cases cited30 opinions
- Burnet v. HarmelSupreme Court of the United States · 1932
- Corn Products Refining Co. v. CommissionerSupreme Court of the United States · 1956
- Palmer v. BenderSupreme Court of the United States · 1932
- Commissioner v. P. G. Lake, Inc.Supreme Court of the United States · 1958
- United States v. MillerSupreme Court of the United States · 1939
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