The Morning Tulsa daily world. [volume] (Tulsa, Okla.) 1919-1927, 1922-08-30
on Market uunta,ions
Treasury Decision on DeDie.
tioH DcdHcfioHs for Years
1916 and 1911

1916 and 1911
The Mid.Coutiucut OH 8 Gas 49,.
ISOLATION bulletin 10 boz iesuoi thi'
week viii say.
The commIssloucr NJ internal rove
uue issued last week Treasury I''.
cisi,n No a3sG allowing fur the first
time depletion deductions Tor tho
ta,allo years 1915 ana 1917 on the
basis of the value ~ tho propcrilca
me- OF March 1st, 1913, In the case OF
operating lcaaeos This decision IN or
tremendous importance 10 Mld-Con-
tinont operators who owned produc-
tIuu or the basic date of March lai
1913 The law of l9lG and 1917
allowed depletion deductions h1Hod
on the value as ~ March lot. 1913.
but tho commissioner OF Internal
revenue had always ruled mat THIS
only applied 20 operating owners
and not 10 loasccs. The not OF 1918
expressly allowed depletion for thai
and subsequent years to tho lessee
based ON tho value Of March let
1913. but the above mentioned de
clBlon for tho first time clears up
the matter for 1919 and 1917.
While tho decision IL general and
will he applicable and available to
all operators who owned property
nt tho basic date. II was probably
rendered in tho case ~ the Brittou-
Johnson Oil company ~ Tulsa.
which was handled by Mosare Hum
welt Wilson ~ Garnett. That firm
filed Rn elaborate argument aud
hrief on the proposition and have
closely followed II. receiving the sun
port Of the Mld-Contlncnt OH & Gas
association. the American Petroleum
Institutc and other organizations and
firms who had cases pending inyolv-
ing the question.
In April. 1919. the report or the
general committee OF the Nid-Con-
tinent Oh ~ Gas association on fed
oral tax matters contained the fol-
lowing statement OF the case and ita
recommendation
The 1915 and 1917 nets express
" allowed depletion based on the
value az OF March !, 1913, whore
tho property was owned prior there
TO. The treasury department. how
ever. construed thcee acts 10 apply
only TO operating owners and eN'
pressly denied the right OF an opor-
nting lessee to value his properties,
This ruling was based upon the de-
cision of the supreme court In tho
case of u. $. VS.. Blwabik Mining Co.
which, however, arose under the
old corporation excise net OF 1903,
which contained II totally different
provision ana which case was ono or
mining lessee who did not pay a
royalty In kind as does the oil Lessee
but operated on n par unit royalty
basis OF 80 cents for each ton of ore
taken out. Neither tho facts nor
the law OF that case are applicable
to the oil lessee II Is the opinion
OF some OF the best authorities on the
question that operating lessces had
the right under the t9l6-l9l7 law To
value their properties az uf March l,
1913, for depletion purposes, the reg
ulatlons to the contrary notwith-
standing. And so It ia suggested that
this matter be given further atten-
tion since II tho right be established
St viii result in reduction OF the
heavy taxes Of 1917 ana Increase In
vested capital for 1918"
President Davis appeared before
the department early In August 90
obtain assurance that the decision AZ
promulgated would grant the dcduc-
tion and make It available not only
20 the operators who had claimed It
but also 10 those who I'm obedience
20 former regulations, had not claim
ed ~.
AllfuAlui ~ Nhllfh ~ AlAN lhNA AlltA'
there Is a flve-Near limitation con
tnlned In the 1921 law which may
preclude recovery Of the excess taxes
paid for the year 1916 because five
years has elapsed since the filing OF
the return Tor that year. But tn;
1917 returns are not outlawed Rnt
q all Taxpayers affected should fil'
claims for refund at once after com
putting the amount of depletion e
which they were entitled according
20 the new regulations. II IS sug
Ecstod that claims for refund he file,
on both years and the complete de
cislon is here given Tor the guidance
Of taxpayers Interested,
CT. d. 33SGl.
INCOME TAX.
Depletion OF ana gas properties
Section and II OF Revenue Act O
IOlG. uTiIlla IgO rauulnfions 2