Cree v. Commissioner
United States Board of Tax Appeals
The petitioners acquired two oil and gas leases; also, both earlier and later, certain rights of participation in the working interests, each limited to certain wells drilled upon such leases.
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The petitioners acquired two oil and gas leases; also, both earlier and later, certain rights of participation in the working interests, each limited to certain wells drilled upon such leases. Held, that each lease, and not each well, is a "property" of the petitioners, within the meaning of section 114(b)(3), Revenue Act of 1938, and the petitioners may deduct depletion upon the gross income received by them from each lease, subject to the limitation to 50 percent of net income from such property.
1Opinion of the Court
*870OPINION.
Disnet :
The petitioners acquired by assignment two separate oil and gas leases. Both before and after and with such acquisition they *871also acquired certain fractional interests which the previous lessee had sold. These provided for participation in the working interest, that is, the lessee’s interest, after payment of royalties, but each was limited to a particular well. 1'n filing Federal income tax returns, the petitioners reported the income from the participating interests as “royalties” and separately reported the income from leases as income from business or profession. Depletion…
2Cited by2 opinions
- Lloyd Corp. v. RiddellDistrict Court, S.D. California · 1963
- Cree v. CommissionerUnited States Board of Tax Appeals · 1942