Jefferson & Clearfield Coal & Iron Co. v. United States
Citation | 14 F. Supp. 918 |
Decision Date | 01 June 1936 |
Docket Number | No. 41844.,41844. |
Parties | JEFFERSON & CLEARFIELD COAL & IRON CO. v. UNITED STATES. |
Court | Court of Federal Claims |
Howe P. Cochran, of New York City (C. Leo De Orsey, of Washington, D. C., on the briefs), for plaintiff.
George W. Billings, of Washington, D. C., and Robert H. Jackson, Asst. Atty. Gen., for the United States.
Before BOOTH, Chief Justice, and GREEN, LITTLETON, WILLIAMS, and WHALEY, Judges.
Upon facts which are not in dispute, the question presented in this case is whether, in determining plaintiff's income and profits tax liability for 1920, the deduction allowable for depletion of its mining properties is to be computed on the cost of such property or on their March 1, 1913, value, where the former exceeds the latter. Plaintiff acquired certain coal properties at a cost which was in excess of their value on March 1, 1913. In accordance with the statute and regulations (section 234 (a) (9) of the Revenue Acts of 1918 and 1921 40 Stat. 1077, 42 Stat. 254 and articles 201 and 202 of Regulations 45 and 62), the Commissioner computed a depletion allowance of $30,994.62, based upon the March 1, 1913, value, whereas, if he had used cost, as contended for by plaintiff, the allowance would have been $75,730.19. The governing statute referred to provides, in so far as here material:
The regulations are in conformity with the statute, and plaintiff agrees that the allowance was made by the Commissioner in accordance therewith. What the plaintiff urges is that Congress is without power to base a deduction for depletion on the March 1, 1913, value of mining properties when such value is less than cost, for the reason that such action would result in a tax on capital; that is, would not permit deductions sufficient in amount to return its capital to it tax free. That proposition is fully answered by the principle, now well established, that deductions from gross income are creatures of the statute which may not be taken as a matter of right but wholly because all deductions are matters of legislative grace and that this rule applies to a deduction for exhaustion of wasting assets, depletion, or depreciation, even though the amount as allowed may not be sufficient to return to the taxpayer its capital tax free. Stanton v. Baltic Mining Co., 240 U.S. 103, 36 S.Ct. 278, 60 L.Ed. 546; Von Baumbach v. Sargent Land Co., 242 U.S. 503, 37 S.Ct. 201, 61 L.Ed. 460; United States v. Biwabik Mining Co., 247 U.S. 116, 38 S.Ct. 462, 62 L.Ed. 1017; and Burnet v. Thompson Oil & Gas...
To continue reading
Request your trial-
Farmar v. United States
...74 L.Ed. 385 (1930); South Jersey Sand Co. v. Commissioner, 267 F.2d 591, 593 (3d Cir. 1959); Jefferson & Clearfield Coal & Iron Co. v. United States, 83 Ct.Cl. 491, 494, 14 F.Supp. 918, 920, cert. denied, 299 U.S. 581, 57 S.Ct. 46, 81 L.Ed. 428 (1936). Ambiguities should be resolved agains......
- Citizens & Southern Nat. Bank v. United States, 42829.