United States v. Biwabik Mining Co.
247 U.S. 116 (1918)

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U.S. Supreme Court

United States v. Biwabik Mining Co., 247 U.S. 116 (1918)

United States v. Biwabik Mining Company

No. 594

Argued Mach 4, 5, 6, 1918

Decided May 20, 1918

247 U.S. 116




In computing the excise, under the Corporation Tax Act of August 5, 1909, of a mining Company operating under a lease terminable at its option in any year and which grants it the privilege of entering, and of exploring for, mining and removing ores, in return for a royalty of so much per ton removed, but which does not convey the ore in situ, that part of the value of the ore disposed of during the tax .year which represents its value as ore in place when the law took effect should not be deducted as depreciation of capital assets. Von Baumbach v. Sargent Land Co.,242 U. S. 503.

The lease here involved is not to be construed as a conveyance of the ore in place, although the latter could be measured with substantial accuracy.

242 F. 9 reversed.

The case is stated in the opinion.

Page 247 U. S. 118

MR. JUSTICE DAY delivered the opinion of the Court.

This case is here upon a writ of certiorari to the United States Circuit Court of Appeals for the Sixth Circuit. It was instituted by the United States in the District Court of the United States for the Northern District of Ohio to recover the sum of $2,653.72, being 1% upon $265,372.08, which, it was claimed, the mining company had wrongfully omitted from the return of its net income for the year 1910 under the Corporation Tax Act of 1909.

The case was tried upon an agreed statement of facts which, omitting unnecessary details, were epitomized by the district court as follows:

"In the year 1898, the defendant, by assignment of a lease, acquired a leasehold estate in certain ore-producing properties in the State of Minnesota from which it mined ore from that date to and including the year 1910. For the year 1910, the defendant made a return to the Collector

Page 247 U. S. 119

of Internal Revenue of its gross income, and from this amount it deducted, 'to cover realization of unearned increment,' the sum of $265,372.08. The amount of this deduction was arrived at by multiplying the number of tons of ore mined during the year by 48 3/4

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