Sabine Royalty Corp. v. Commissioner
United States Tax Court
1. Interest. -- Petitioner, a corporation engaged in the business of investing in oil properties, issued income debentures in exchange for its own stock.
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1. Interest. -- Petitioner, a corporation engaged in the business of investing in oil properties, issued income debentures in exchange for its own stock. Held, interest payments on such debentures are deductible under section 23 (b), I. R. C. 2. Depletion. -- Petitioner increased the 1947 cost basis of its royalty interests by the excess of cost depletion deductions over percentage depletion deductions for the years 1933 to 1939 when percentage depletion had been claimed for those years. Held, increase to cost basis in the years before us improper and depletion determined from the increased…
1Opinion of the Court
OPINION.
Issue 1.
Johnson, Judge:
Petitioner claims that payments to income debenture holders were, in fact, interest payments and deductible under section 23 (b), Internal Revenue Code. Respondent has determined that these amounts were paid as dividends, and has therefore disallowed the interest deductions.
A number of criteria must be taken into consideration before determining whether a certain security is in fact a form of capital stock or evidence of indebtedness. John Kelley Co., 1 T. C. 457, 462, affd. 326 U. S. 521; New England Lime Co., 13 T. C. 799. No single factor is necessarily…
2Cases cited7 opinions
- United States v. LudeySupreme Court of the United States · 1927
- John Kelley Co. v. CommissionerSupreme Court of the United States · 1946
- Virginian Hotel Corporation v. Helvering, Commissioner of Internal RevenueSupreme Court of the United States · 1943
- Pierce Estates, Inc. v. CommissionerUnited States Tax Court · 1951
- Helvering v. Virginian Hotel CorporationCourt of Appeals for the Fourth Circuit · 1943
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3Cited by1 opinion
- Sabine Royalty Corp. v. CommissionerUnited States Tax Court · 1951