Retsal Drilling Co. v. Commissioner

Petitioner entered into contracts with drilling contractors for the drilling and completing of oil and gas wells on its properties for a stipulated price per well. The contractors agreed to do all of the drilling and to furnish all material and equipment, except that petitioner was to furnish some of the supplies required for drilling operations and some items of equipment, to swab certain wells in, and in some cases to furnish a man to supervise the drilling of the sand and the running of the casing. Held, that petitioner is not entitled to deduct as intangible drilling and development costs…