Petroleum Exploration v. Burnet
288 U.S. 467 (1933)

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U.S. Supreme Court

Petroleum Exploration v. Burnet, 288 U.S. 467 (1933)

Petroleum Exploration v. Burnet

No. 448

Argued February 8, 1933

Decided March 13, 1933

288 U.S. 467




Decided on the authority of United States v. Dakota-Montana Oil Co., ante, p. 288 U. S. 459.

61 F.2d 273 affirmed.

Page 288 U. S. 468

Certiorari, 287 U.S. 592, to review the reversal of an order of the Board of Tax Appeals, 23 B.T.A. 890, overruling a deficiency assessment of income tax.

MR. JUSTICE STONE delivered the opinion of the Court.

Petitioner, a Maine corporation, in making its tax returns of income derived from the operation of oil wells in the years 1925, 1926, and 1927, claimed a deduction from gross income of a depreciation allowance on account of the capitalized costs of drilling the oil wells. The Commissioner refused to allow the deductions, and assessed a corresponding deficiency against the taxpayer. On appeal, the Board of Tax Appeals held that the deductions should have been allowed. 23 B.T.A. 890. On petition for review, the Court of Appeals for the Fourth Circuit reversed the order of the Board. 61 F.2d 273. The court held that the deductions claimed were included in the depletion allowance fixed by § 234(a)(8) of the Revenue Act of 1926 at 27 1/2 percent of petitioner's gross income for the years in question, and could not be allowed as depreciation of improvements. This Court granted certiorari to resolve a conflict of the decision below with that of the

Page 288 U. S. 469

Court of Claims in Dakota-Montana Oil Co. v. United States, 59 F.2d 853. For reasons stated in United States v. Dakota-Montana Oil Co., ante, p. 288 U. S. 459, the Commissioner rightly refused to allow the deductions claimed, and the judgment below is


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