McLean v. Commissioner
United States Tax Court
Petitioners are trust beneficiaries of a trust which during the years in question was the lessor in certain mining leases. Under the terms of each lease the lessee was to pay to the trust a royalty on each ton of iron ore mined and removed and to pay ad valorem taxes on the minerals in place. Respondent disallowed that portion of the depletion deduction taken by the lessor attributable to the inclusion in gross income of ad valorem taxes paid by the lessees.
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Petitioners are trust beneficiaries of a trust which during the years in question was the lessor in certain mining leases. Under the terms of each lease the lessee was to pay to the trust a royalty on each ton of iron ore mined and removed and to pay ad valorem taxes on the minerals in place. Respondent disallowed that portion of the depletion deduction taken by the lessor attributable to the inclusion in gross income of ad valorem taxes paid by the lessees. Held, the issue is ruled by our opinion in Winifred E. Higgins, 33 T.C. 161, that the petitioners, who are in the position of lessors,…
1Opinion of the Court
OPINION
The issue here is whether ad valorem property taxes on the minerals in place paid by a lessee pursuant to a clause in the lease are includable in the lessor’s depletable gross income under sections 611 and 613,1.R.C. 1954.2
Section 611 provides that “In the case of mines, * * * there shall be allowed as a deduction in computing taxable income a reasonable allowance for depletion.” And section 613 provides the deduction shall, in the case of “metal mines,” be 15 percent of the “gross income from the property excluding from such gross income an amount equal to any rents or royalties paid…
2Cases cited12 opinions
- Douglas v. CommissionerSupreme Court of the United States · 1944
- State Ex Rel. Inter-State Iron Co. v. ArmsonSupreme Court of Minnesota · 1926
- Marble v. Oliver Iron Mining Co.Supreme Court of Minnesota · 1927
- United States Steel Corporation v. United StatesDistrict Court, S.D. New York · 1967
- Burt v. United StatesUnited States Court of Claims · 1959
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3Cited by3 opinions
- United States Steel Corporation v. United StatesCourt of Appeals for the Second Circuit · 1971
- McLean v. CommissionerUnited States Tax Court · 1970
- Thornton v. CommissionerUnited States Tax Court · 1970