Gates Rubber Co. & Subsidiaries v. Commissioner
United States Tax Court
On petitioners' consolidated Federal income tax returns for the taxable years ending Feb. 26, 1972, and Dec. 29, 1973, deductions were claimed for intangible drilling costs incurred in connection with the drilling of offshore wells with mobile rigs.
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On petitioners' consolidated Federal income tax returns for the taxable years ending Feb. 26, 1972, and Dec. 29, 1973, deductions were claimed for intangible drilling costs incurred in connection with the drilling of offshore wells with mobile rigs. The deductions were disallowed in the statutory notice of deficiency on the ground that such costs did not come within the definition of "intangible drilling and development costs" found in sec. 1.612-4, Income Tax Regs., and that, therefore, such costs should be treated as capital costs of the properties concerned. Held, the intangible expenses…
1Opinion of the Court
Goffe, Judge:
The Commissioner determined deficiencies in the Federal income taxes due from the petitioners in the following amounts for the designated taxable years:
Taxable year ending Deficiency
Feb. 26, 1972.$1,116,614
Dec. 29, 1973.985,904
After settlement of numerous issues determined in the Commissioner’s statutory notice of deficiency, the only issue left for us to decide is whether petitioner, the Gates Rubber Co., as a partner in a partnership which was, in turn, a partner in several other drilling partnerships, may deduct as intangible drilling and development costs its aliquot share of…
2Cases cited12 opinions
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