Cline v. Commissioner
United States Tax Court
In consideration for the negotiation of certain coal leases on behalf of the operator, petitioners acquired royalty interests in those leases. Subsequently, petitioners and the operator entered into a second contract whereby, in lieu of a royalty on coal mined from the specific leases, petitioners would receive a lesser royalty on all the coal handled by the operator.
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In consideration for the negotiation of certain coal leases on behalf of the operator, petitioners acquired royalty interests in those leases. Subsequently, petitioners and the operator entered into a second contract whereby, in lieu of a royalty on coal mined from the specific leases, petitioners would receive a lesser royalty on all the coal handled by the operator. Held, the second contract resulted in the sale or exchange of the royalty interests acquired by petitioners under the original contract; under the second contract, the petitioners did not retain an economic interest within the…
1DissentTannenwald, J.
I cannot escape the conclusion that petitioners herein simply received royalty income representing compensation for services. Assuming, for the purposes of decision, that the right which they received under the February 1, 1966, agreement constituted "property” sufficient to support their claim of an economic interest for purposes of depletion (an issue which respondent concedes and we are therefore not called upon to decide), it does not necessarily follow that such property constituted a capital asset for purposes of determining the nature of the income which they subsequently derived…
2Cases cited10 opinions
- Commissioner v. P. G. Lake, Inc.Supreme Court of the United States · 1958
- United States v. William D. Frazell and Martha T. FrazellCourt of Appeals for the Fifth Circuit · 1964
- H. B. Zachry Co. v. CommissionerUnited States Tax Court · 1967
- Shamburger v. CommissionerUnited States Tax Court · 1973
- United States v. William D. Frazell and Martha T. FrazellCourt of Appeals for the Fifth Circuit · 1965
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