Cowden v. Commissioner
United States Tax Court
1. During 1951 petitioners, who reported their income on the cash receipts and disbursements basis, executed to an oil company a mineral lease on lands situated in Texas in which petitioners held mineral interests.
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1. During 1951 petitioners, who reported their income on the cash receipts and disbursements basis, executed to an oil company a mineral lease on lands situated in Texas in which petitioners held mineral interests. A part of the consideration to petitioners for the execution of the lease was a fixed bonus or advance royalty in the amount of $ 511,192.50. The lessee was ready, able, and willing to pay to petitioners the entire amount of the bonus on execution of the lease in 1951 but in deference to the wishes of one of the petitioners agreed to pay petitioners a small portion of the bonus in…
1DissentForrester, J.
I respectfully dissent from the holding of the majority on the first issue.
The conclusion there reached is in effect that taxpayers are not free to make the bargain of their choice, even though that bargain be made at arm’s length with a third party.
Said conclusion seems to be based on the narrow premise that section 111(b) cannot apply because of the character of the thing bargained away and upon the broad premise that this particular contract with Stanolind was the equivalent of cash in petitioners’ hands and therefore taxable under section 22(a).
As to the narrow premise it seems clear to…
2Cases cited14 opinions
- Burnet v. HarmelSupreme Court of the United States · 1932
- United States v. Cumberland Public Service Co.Supreme Court of the United States · 1950
- United States v. IshamSupreme Court of the United States · 1873
- Bedell v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1929
- Humphrey v. CommissionerUnited States Board of Tax Appeals · 1935
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