Court Opinion

ID: 6802003
Source: CourtListenerOpinion
Date Created: 2022-07-23 18:42:58.346193+00
Date Added: 2024-06-11T16:03:16.832086
License: Public Domain

*1315OPINION.
Green:
Briefly stated, the situation is this: The taxpayer, owning the fee in mineral land subject to a lease, permitted the lessee or the sublessees, of which his own company was one, to remove coal continuously after July 11, 1912 (the date on which he acquired the property), upon the payment of a royalty to him of 2.1 cents. Why this was done is not disclosed and is not material. That it was done is important in that, in our judgment, the royalty rate in effect on March 1,1913, is determinative of the value of the taxpayer’s interest therein and of the rate of depletion to be applied.
The evidence in several places indicates, to us that there were transactions that were not disclosed to us; that not all leases were made at arm’s length, and that the taxpayer may have been actuated by considerations of which we are not advised. It is apparent from the documentary evidence introduced that the lease from Keller (receiver) to the J. K. Dering Coal Co. did not include all' the coal lands previously leased to it by the railroad, from which it removed, subsequent to the Keller lease, a large quantity of coal.
The effect of it all is to permit the lessee and sublessees under the Whitcomb lease to remove coal upon the payment of a lesser royalty than is provided therein. The value of, and the correct depletion rate to be applied to, mineral rights subject to a lease on March 1, 1913, may properly be determined from the royalty rate provided in the lease and the tonnage in place on that date. This is exactly what the Commissioner did in arriving at the depletion rate which we have approved.
As to the 1917 tax, we must grant the Commissioner’s motion. The tax for this year has been assessed and no claim in abatement has been denied. Under the Bevenue Act of 1924, this Board has no jurisdiction until after the filing of a claim in abatement in accordance with the provisions of the statute and the denial thereof. Appeal of Oakdale Coal Co., 1 B. T. A. 773.
The tax for 1918 has not been assessed. Where the Commissioner admits that the tax for the year in question may not be assessed or collected because the statutory period of limitation has run, no purpose can be served by a consideration of the tax liability for such year.

The proceeding is dismissed as to 1917 for want of jurisdiction. There is no deficiency for lpl8, and the deficiency for 1919 is $⅛,-627.59. Order will he entered accordingly.