Reinecke v. Spalding
Decision Date | 06 January 1930 |
Docket Number | No. 59,59 |
Parties | REINECKE, Collector of Internal Revenue, v. SPALDING |
Court | U.S. Supreme Court |
The Attorney General and Mr. Claude R. Branch, of Providence, R. I., for petitioner.
Messrs. John M. Zane and Alfred T. Carton, both of Chicago, Ill., for respondent.
The respondent owns a one-sixth interest in several leases executed 1901, 1902, 1903, and 1905, which authorize the lessee to take iron ore from certain Minnesota lands for 25, 45 and 50 years from their respective dates. These leases require payments quarterly of 25 cents royalty per ton upon all ore extracted; provide for minimum annual production and termination under specified circumstances.
During the year 1917 she received out of such royalties $260,072.30; during 1918, $219,940.43. For 1917 she was allowed $99,561.20 as depletion; for 1918, $84,979.55. Income tax was assessed against her upon the balances and payment exacted. Thereafter she unsuccessfully claimed refunds because the sums allowed for depletion were insufficient. The present suit followed.
The Revenue Act of 1918, c. 18, 40 Stat. 1057, 1066, 1067 (approved February 24, 1919), provides:
Section 5, Revenue Act for 1916, c. 463, 39 Stat. 756, 759, is in the margin. 1 Neither party suggests that this dif- fers from the corresponding provision in the act of 1918, supra, in any way here material.
In her claim presented to the tax officer for refund of overpayment for 1917 respondent said:
A like statement appears in her claim concerning overpayment for 1918.
The declaration has two counts. The first, relating to payments for 1917, alleges:
'That under the terms of the law the depletion for ore extracted or considered to be extracted was fixed at the market value of the ore in place in the mine at the time and place of extraction, but if such depletion allowance per ton exceeded the amount fixed as the royalty per ton in the lease, the depletion allowance to the plaintiff could not exceed such royalty, but since the royalty when paid included an amount of interest of the payment considered as deferred from March 1, 1913, to the date of actual payment of royalty and the allowance of such depletion in successive years could never exceed the market value of the ore in the mine on March 1, 1913.
'That such an allowance of depletion in successive years and in the year 1917 did not and could not exceed the market value of such ore on March 1, 1913.
'That if of each payment for each ton of ore extracted, the amount of such payment which represents interest on the payment as deferred and actually paid, be figured, the income of the owner will be accurately determined as that part of...
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