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41 T.C. 91

Campbell v. Commissioner

United States Tax Court

Decided October 24, 1963

United States Tax Court · decided 1963-10-24

Petitioners received a bonus of $ 69,604.16 on January 5, 1959, for the execution of an oil and gas lease to Sinclair. A well was drilled and subsequently plugged and abandoned as a dry hole in 1959. Held: that petitioners are not entitled to depletion of $ 19,120.07 on the bonus where it was established within the taxable year that no production would occur under the lease. Dolores Crabb, 41 B.T.A. 686 (1940), distinguished.

Cited by 4 later decisions — most recently September 1976

1 federal appellate ·

Relies on Crabb v. Commissioner · Crabb v. Commissioner · Crabb v. Commissioner

Good law ✅— No negative treatment on recordhow we know

Decision will be entered under Rule 50 · Decided 1963-10-24

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Raum, J.,

¶1concurring: Although I agree with the result reached in this case, I would not make it turn upon the fortuitous circumstance that all the events took place within the same tax year, and thereby apply a different standard for the allowance of a depletion deduction in the first instance than would be employed where the events straddled 2 tax years and where the amount of the deduction initially allowed is restored to income in the later year. The same result should follow regardless of whether the well was abandoned as a dry hole and the lease terminated in the year the bonus was received, and regardless of whether there was no production at all or merely nominal production. It is inconceivable to me that Congress could have intended to allow a depletion deduction in such circumstances without an offsetting adjustment upon termination of the lease, whenever that might occur. To the extent that Dolores Crabb, 41 B.T.A. 686,1 is to the contrary, I think it is wrong and should not be followed.

Opper, Mulroney, and Forrester, JJ., agree with this concurring opinion.

¶2 The issue in Dolores Crabb in respect of the lease in which there was nominal production, as in the present case, does not appear to have been reviewed on appeal. 119 F. 2d 772 (C.A. 5), 121 F. 2d 1015 (C.A. 5), 136 F. 2d 501 (C.A. 5).

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