Porter Royalty Pool, Inc. v. Commissioner
United States Tax Court
1. Prior to the taxable year, certain land owners entered into oil and gas leases with various oil companies, reserving to themselves a one-eighth royalty interest in the oil produced. Subsequently a pooling agreement was devised whereby, in 1933, one-half of the royalty interest of each land owner was transferred to the petitioner in exchange for shares of stock in a number based on the number of acres pooled.
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1. Prior to the taxable year, certain land owners entered into oil and gas leases with various oil companies, reserving to themselves a one-eighth royalty interest in the oil produced. Subsequently a pooling agreement was devised whereby, in 1933, one-half of the royalty interest of each land owner was transferred to the petitioner in exchange for shares of stock in a number based on the number of acres pooled. In addition, the promoters of the pool received 25 per cent of the petitioner's stock. Under the pooling agreement, the royalties paid on the interests thus pooled were to be collected…
1Opinion of the Court
OPINION.
Van Fossan, Judge:
The first issue is whether or not the oil royalties paid to the petitioner in 1941, pursuant to the decree of the Supreme Court of Michigan, constitute taxable income to it. The petitioner contends that the royalty interests reserved by the fee owner-lessors were simply rights to receive income if, as, and when realized; that, under the pooling agreements, they assigned to the petitioner the right to receive a portion of this income; and that the entire transaction thus constituted an anticipatory assignment of future income which, when realized, was taxable to the…
2Cases cited8 opinions
- Lucas v. EarlSupreme Court of the United States · 1930
- Helvering v. HorstSupreme Court of the United States · 1940
- Moline Properties, Inc. v. CommissionerSupreme Court of the United States · 1943
- Palmer v. BenderSupreme Court of the United States · 1932
- Burnet v. Commonwealth Improvement Co.Supreme Court of the United States · 1932
3 more not listed; retrieve them via the Exa API.
3Cited by2 opinions
- Farmers Cooperative Co. v. BirminghamDistrict Court, N.D. Iowa · 1949
- Porter Royalty Pool, Inc. v. CommissionerUnited States Tax Court · 1946