Lucas v. Sterling Oil & Gas Co.

MOORMAN, Circuit Judge.

Regulations issued by the Treasury Department, article 223 of Regulations 45, gave the taxpayer, under the Revenue Act of 1918, the option of charging certain expenditures in connection with oil and gas wells to capital or treating them as operating expenses. The manner in which the election was to be made was not specified, hut, once made, it was to control for all subsequent years. In appellee’s original return for 1919, made by an accountant in 1920, expenditures of this character' were charged to capital account. The return as thus made disclosed no taxable income.…