Commissioner of Internal Revenue, Petitioner, v. Robert H. Miller and Doris K. Miller, Respondents, 227 F.2d 326 (9th Cir. 1955)

Annotate this Case
US Court of Appeals for the Ninth Circuit - 227 F.2d 326 (9th Cir. 1955) November 17, 1955

H. Brian Holland, Asst. Atty. Gen., John Potts Barnes, Chief Counsel, I. R. S., Chicago, Ill., Ellis N. Slack, Robert N. Anderson, S. Dee Hanson, Spe. Assts. to Atty. Gen., for petitioner.

Max B. Lewis, Salt Lake City, Utah, Tippit, Haskell & Welborn, Floyd K. Haskell, Denver, Colo., Gustin, Richards & Mattsson, Harley W. Gustin, Salt Lake City, Utah, for respondents.

Before HEALY and FEE, Circuit Judges, and WALSH, District Judge.


This matter is before us on petition to review a decision of the Tax Court.

The Commissioner assessed deficiencies in respondents' income taxes paid for the years 1948 and 1949. On redetermination the Tax Court held with the taxpayers. The question presented is whether first-year rentals paid the government by respondents in obtaining noncompetitive oil and gas leases are ordinary and necessary business expenses deductible as rentals under § 23(a) (1) (A) of the 1939 Internal Revenue Code, 26 U.S.C.A. § 23(a) (1) (A), or whether, as contended by the Commissioner, they constituted capital expenditures recoverable only through depletion deductions.

In holding that the rentals paid were true rentals, and therefore deductible as business expenses, the Tax Court followed its earlier decision in Olen F. Featherstone, 22 T.C. 763, which latter was reviewed and unanimously upheld by the full court. The Tenth Circuit in the cognate case of United States v. Dougan, 214 F.2d 511, reached the same conclusion. We are satisfied that these holdings are correct, and the decision below is accordingly affirmed.