350 F2d 396 Lawson v. Commissioner of Internal Revenue

350 F.2d 396

65-2 USTC P 9615

Cecil C. LAWSON et al., Petitioners,

No. 9491.

United States Court of Appeals Fourth Circuit.

Argued June 29, 1965.
Decided Aug. 9, 1965.

John Y. Merrell, Washington, D.C., for petitioners.

Melva M. Graney, Atty., Dept. of Justice (Louis F. Oberdorfer, Asst. Atty. Gen., and Lee A. Jackson and Michael Mulroney, Attys., Dept. of Justice, on brief), for respondent.

Before HAYNSWORTH, Chief Judge, and SOBELOFF and BRYAN, Circuit Judges.



The taxpayers are extractors of coal, operating under contracts with a lessee of extensive coal deposits. Their relationship to the lessee and the coal in place is substantially the same as that of the contractors in the case of Paragon Jewel Coal Company, Inc. v. Commissioner, decided by the Supreme Court of the United States on April 28, 1965, 85 S.Ct. 1207. There, the Supreme Court held that, under similar circumstances, the depletable interest was owned entirely by the lessee, and that the contractors engaged in the extraction of the coal were not entitled to a depletion deduction. That case governs the result here.


The taxpayers suggest some possible factual distinctions between the situation here and that presented in Paragon Jewel, but, in light of the Tax Court's findings of fact, we find the suggested distinctions insubstantial. Affirmance of the Tax Court's conclusion is compelled by the Supreme Court's holding in Paragon Jewel.