Page Oil Co. v. Commissioner
United States Board of Tax Appeals
1. Petitioner issued four notes for $500,000 each as part of the consideration for the conveyance to it of certain oil lands, and the notes were subordinate in payment to development notes, costs of improvement and development, operating expenses, and payments on a purchase money mortgage. Petitioner kept its accounts on the accrual basis.
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1. Petitioner issued four notes for $500,000 each as part of the consideration for the conveyance to it of certain oil lands, and the notes were subordinate in payment to development notes, costs of improvement and development, operating expenses, and payments on a purchase money mortgage. Petitioner kept its accounts on the accrual basis. Held, that petitioner may deduct interest accrued on such subordinate notes during each of the taxable years. 2. Petitioner is not entitled to depreciate the cost of drilling water wells which were used to stimulate the production of its oil wells. United…
1Opinion of the Court
*957OPINION.
Leech :
Petitioner introduced no evidence and made no contentions on brief as to the so-called “management fee” of $16,800 nor as to the $147 paid on account of a capital stock tax. Having recourse to the usual presumption of correctness, respondent’s actions in these two respects are sustained.
Of the issues remaining for decision, the first is whether petitioner is entitled to a deduction of the interest on the four subordinate notes, *958which, is claimed to be deductible in each of the taxable years to the extent of $120,000. A necessary preliminary inquiry here is whether petitioner…
2Cases cited4 opinions
- Niles Bement Pond Co. v. United StatesSupreme Court of the United States · 1930
- United States v. Dakota-Montana Oil Co.Supreme Court of the United States · 1933
- Burnet v. A. T. Jergins TrustSupreme Court of the United States · 1933
- Petroleum Exploration v. BurnetSupreme Court of the United States · 1933
3Cited by10 opinions
- Commissioner of Internal Revenue v. Page Oil Co.Court of Appeals for the Second Circuit · 1942
- James A. Lewis Engineering, Inc. v. CommissionerUnited States Tax Court · 1962
- Producers Chemical Co. v. CommissionerUnited States Tax Court · 1968
- Estate of Paul Hansen v. CommissionerUnited States Tax Court · 1945
- James A. Lewis Engineering, Inc. v. CommissionerUnited States Tax Court · 1962
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