F. H. E. Oil Co. v. Commissioner
United States Tax Court
1. During the taxable years involved petitioners were engaged in the oil business in Texas. They acquired certain oil and gas leases and as part of the consideration therefor expressly agreed to drill oil wells upon the leased property.
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1. During the taxable years involved petitioners were engaged in the oil business in Texas. They acquired certain oil and gas leases and as part of the consideration therefor expressly agreed to drill oil wells upon the leased property. Held, the cost of drilling these wells represented a part of the cost of the leases and must be recovered by way of depletion, and the provisions of article 23 (m)-16, Regulations 101, granting petitioners an option to either capitalize intangible drilling costs or deduct them as ordinary and necessary business expenses, are not applicable. 2. Petitioners also…
1Opinion of the Court
OPINION.
Hill, Judge:
We are first called upon to determine whether petitioners are entitled to deduct from income in each of the taxable years in question “intangible drilling and development costs” incurred in the drilling of nine oil wells on leased property. The amounts expended are not in controversy. Petitioners assert that Regulations 101, section 23 (mj-lfi,1 and the identical provision of Regulations 103. granting to them an option to deduct such expenditures or to charge them to capital, apply in this proceeding. If they do, then petitioners must prevail, for they previously exercised…
Also in this document: Dissent.
2Cases cited14 opinions
- Waggoner Estate v. Sigler Oil Co.Texas Supreme Court · 1929
- The Texas Company v. DavisTexas Supreme Court · 1923
- Texas Co. v. DavisTexas Supreme Court · 1923
- Lowther Oil Co. v. Miller-Sibley Oil Co.West Virginia Supreme Court · 1903
- Investors' Utility Corp. v. ChallacombeCourt of Appeals of Texas · 1931
9 more not listed; retrieve them via the Exa API.
3Cited by28 opinions
- Berkshire Oil Co. v. CommissionerUnited States Tax Court · 1947
- F. H. E. Oil Co. v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1945
- Island Creek Coal Co. v. CommissionerUnited States Tax Court · 1958
- Manahan Oil Co. v. CommissionerUnited States Tax Court · 1947
- Southwest Exploration Co. v. CommissionerUnited States Tax Court · 1952
23 more not listed; retrieve them via the Exa API.