Terminal Drilling & Production Co. v. Commissioner
United States Tax Court
Petitioner, engaged in the business of drilling oil wells, claimed deductions for drilling expenses it had paid or incurred on some wells that were not completed by the end of its tax-paying periods. Held, under petitioner's method of accounting, expenses of drilling wells could be deducted only in the period when the wells were completed.
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Petitioner, engaged in the business of drilling oil wells, claimed deductions for drilling expenses it had paid or incurred on some wells that were not completed by the end of its tax-paying periods. Held, under petitioner's method of accounting, expenses of drilling wells could be deducted only in the period when the wells were completed. Respondent's disallowance of expenses claimed by petitioner in the fiscal years 1953 and 1954 on wells which were unfinished in those periods is sustained.
1Opinion of the Court
MulROney, Judge:
The respondent determined deficiencies in the income tax of petitioner for the fiscal years ended June 30,1953, and June 30, 1954, in the respective amounts of $4,464.99 and $21,445.17.
Petitioner was engaged in the oil well drilling business. The question in the case involves its right to deduct drilling expenses paid or incurred upon incompleted wells at the time the taxable periods ended.
FINDINGS OP PACT.
Some of the facts were stipulated and they are found accordingly.
Petitioner is a California corporation organized on November 18, 1952, and it commenced business on January…
2Cases cited3 opinions
- Commissioner of Int. Rev. v. Rowan Drilling Co.Court of Appeals for the Fifth Circuit · 1942
- Jones, Collector of Internal Revenue v. SmithCourt of Appeals for the Tenth Circuit · 1952
- Rowan Drilling Co. v. CommissionerUnited States Board of Tax Appeals · 1941
3Cited by3 opinions
- Hamilton Industries, Inc. v. CommissionerUnited States Tax Court · 1991
- Hamilton Industries, Inc. v. CommissionerUnited States Tax Court · 1991
- Terminal Drilling & Production Co. v. CommissionerUnited States Tax Court · 1959