The circle banner. [volume] (Circle, Mont.) 1914-1939, 1924-02-08
OIL MEN WOULD
AMEND TAX BILL
OPPOSE PROVISION IN MELLON
MEASURE REGARDING DEDUC-
TION FOR DEPLETION
Are Urging States Congressional
Delegation to Protect Discovery
Right Values; Affects Everyone
Interested in New Fields.

Independent oil men of Montana
are urging upon the Montana con
gressional delegation the importance
of protecting discovery right values
as regard income tax, opposing the
provision of the Mellon bill now be-
fore congress which cuts in half the
allowed deduction for depletion.
Certainly mineral or oil and gas
deposits discovered are the property
of the discoyerer and his right for
one hundred per cent deduction for
depletion sustained as provided in the
present revenue act is considered
equitable by those friendly to the in
dustry," said wire sent by l.. c..
Stevenson, president of the Sunburst
Oil and Gas company. 1--WE urge that
you bring every possible influence of
yourself, colleagues and friends of
these industries in other states in
support of full depletion rights pro-
vided in the present law being pre-
served"
This, in substance, is the plea of
independents throughout the state.
The present law provides that when
a discovery well is drilled the opera
tor may set up discovery value and
figure depletion as the field is de-
veloped The Mellon tax bill would
allow the operator to set up dis
covery value but would allow only SO
per cent depletion.
The provision affects every stock
holder in an oil company which has
spent or will spend money in trying
to bring in new fields. The change
in the law will seriously affect the
companies operating in Montana and
will make a cumbersome tax burden
on the pioneer who succeeds in dis
covering new oil field.
The present law reads:
Deductions Allowed: depletion.
"Sec. PA. (a) That in computing
net income there shall be allowed as
deductions:
40. In the case of mines, oil and
gas wells, other natural deposits, and
timber, a reasonable allowance for
depletion and for depreciation of i'm
according to the peculiar |
in each case, based upon |
cost, including cost of development |
not otherwise deducted. Pro- |
vided, further, that in the case of /
mines, oil and gas wells, not acquired |
as the result of purchase of a proven |
tract or lease, where the fair market |
value of the property is materially |
to the cost, the de-
pletion allowance shall be based upon
the fair market value of the property |
at the date of the discovery, or with
n 80 days thereafter Such /
reasonable allowance in all the above
cases to be made under rules and reg
Ilations to be prescribed by the COM
with the approval of the
Discussing the proposed change,
only SO per cent of discov-
cry value for depletion, Mr.. Steven
ion said: sit seems hard to conceive
hat anyone not prejudiced against
he industry would fail to concede
hat when an individual or a COM
,any assumes the expenditure of
ime, money and hazards involved in
for mineral or oil and
,as deposits, any discoveries made
,ecome the property of right belong
ng to the diScoverer, and that in de-
such mineral or oil and gas :
Ieposits and marketing the products
herefrom he is gradually exhaust
ng his property and should have the
right of making deduc-
ions from the gross income derived
rom the sale of such products for
he amount of depletion or exhaus-
ion sustained through production
ach year. 1t is but the negotiable
ecognition of this principle that is
in the provisions of the
evenue act of 1921, excerpts of
hitch are given above. 1t is appar
Mt, therefore, that only prejudice on
he part of enemies of the industry
r lack of appreciation of the equit-
BILE principle underlying right to full
eduction for depletion sustained,
S provided in the present law, could
lad to the reduction of the depletion
llowance from 100 per cent to so
er cent. If the proposed change in
lis provision should be made it will
e very heavy tax discrimination
gainst the mining and the oil and
as industries and will especially af
,ct the welfare of those engaged in
lese industries in Montana and in
.her mining and oil producing
.ates."