Transcalifornia Oil Co. v. Commissioner
United States Board of Tax Appeals
1. The petitioner was the owner of an oil and gas lease and in order to raise the funds needed to drill a well thereon it sold certificates which entitled purchasers to percentage interests in proceeds to be derived from the well's production. All amounts derived from the sale of certificates were entirely consumed in drilling the well.
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1. The petitioner was the owner of an oil and gas lease and in order to raise the funds needed to drill a well thereon it sold certificates which entitled purchasers to percentage interests in proceeds to be derived from the well's production. All amounts derived from the sale of certificates were entirely consumed in drilling the well. Held, that the funds derived from the sale of certificates did not, on the facts here, constitute income to the petitioner; held, further, that petitioner may not include in its gross income, for the purpose of computing its percentage depletion, any part of…
1Opinion of the Court
*124OPINION.
Turner:
The respondent’s contention that petitioner’s transactions in royalty interests resulted in receipt of income is based on the proposition of barter and sale. He argues that the transactions constituted absolute sales of property, and that since the lease was assigned to the petitioner without consideration, the total amounts received from such sales should be included in its gross income.
The petitioner, on the other hand, contends that its development scheme was a joint venture, prosecuted by it and its coinvestors, and that payments received in exchange for interests in…
2Cases cited4 opinions
- Palmer v. BenderSupreme Court of the United States · 1932
- Thomas v. PerkinsSupreme Court of the United States · 1937
- Helvering v. Twin Bell Oil SyndicateSupreme Court of the United States · 1934
- Differding v. BallaghCalifornia Court of Appeal · 1932
3Cited by20 opinions
- Southern Pacific Transp. Co. v. CommissionerUnited States Tax Court · 1980
- William H. Zuhone, Jr. And Audra M. Zuhone v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1989
- Union Pacific Railroad v. United StatesUnited States Court of Claims · 1975
- Denver & R. G. W. R. Co. v. CommissionerUnited States Tax Court · 1962
- W. S. Badcock Corp. v. CommissionerUnited States Tax Court · 1972
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