Court Opinion

ID: 4605968
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:37:29.926506+00
Date Added: 2024-06-11T07:53:17.360152
License: Public Domain

CHEROKEE OCHRE CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Cherokee Ochre Co. v. CommissionerDocket No. 9846.United States Board of Tax Appeals9 B.T.A. 406; 1927 BTA LEXIS 2590; November 29, 1927, Promulgated *2590  DEPLETION. - The March 1, 1913, per ton value of ochre and barytes deposit on petitioner's lands determined as a basis for deductions on account of depletion of ores during the years 1920 and 1921.  F. L. Pearce, Esq., for the petitioner.  A. George Bouchard, Esq., for the respondent.  TRUSSELL *406  In this proceeding the petitioner seeks a redetermination of the income and profits taxes for the years 1920 and 1921 for which the Commissioner has determined deficiencies of $422.88 and $188.46, respectively.  The petitioner alleges error on the part of the Commissioner in the determination of the March 1, 1913, value of the petitioner's deposits of ochre and of barytes, and the depletion allowance based thereon.  FINDINGS OF FACT.  The petitioner is a corporation organized under the laws of the State of Georgia, with principal office at Cartersville.  The petitioner was incorporated in 1904 and acquired the assets of a predecessor company by the issuance of $30,000 par value of capital stock and first-lien, 6 per cent bonds amounting to $15,000.  The petitioner was the owner of certain lands containing barytes and ochre.  On March 1, 1913, there*2591  were 142,111 tons of barytes and 100,000 tons of ochre contained in the property.  They were mined and shipped from the property in 1920, 1,448 tons of ochre and 5,145 tons of barytes and in 1921, 957 tons of ochre and 1,397 tons of barytes.  The fair market value at March 1, 1913, of the deposit of barytes was 40 cents a ton.  The fair market value at March 1, 1913, of the deposit of ochre was $1 a ton.  OPINION.  TRUSSELL: The record of this action contains the testimony of a capable and experienced mining engineer who is thoroughly familiar with properties here under consideration as well as similar properties throughout the Georgia mining districts.  In his testimony he states without qualification that the petitioner's ochre deposits on March 1, 1913, had a value in the ground of $1.50 per ton and that the petitioner's deposits of barytes ore on the same date had a value in the *407  ground of 60 cents per ton.  The witness further testified at considerable length concerning the history and development of these and similar mining enterprises and the selling prices of ores over long periods of time and respecting the barytes ore royalties paid in cases where such*2592  ores were removed under royalty leases.  The record also contains evidence that immediately upon the beginning of the World War in 1914, and continuously thereafter the values of ochre and barytes ores were on a continuing upward movement, reaching peak prices at the close of and since the war and considering the witness's testimony in connection with developments since 1913 it appears that his unqualified opinion of value on March 1, 1913, may have been unconsciously influenced by the much higher values prevailing in later years.  And, while no question can be raised as to the qualifications of the witness to give opinion testimony upon matters here under consideration, we are led to the conclusion from all the facts contained in the record that his estimate of March 1, 1913, values are too high and, in view of this consideration and of all the record of this action, we are of the opinion and have so found that for the purposes of this action, the March 1, 1913, value of the petitioner's ochre ores was $1 per ton, and that the March 1, 1913, value of the petitioner's barytes ore was 40 cents per ton, and that these values should be used as a basis for the depletion deduction during*2593  the years here under review.  The deficiencies may be recomputed in accordance with the foregoing findings of fact and opinion upon 15 days' notice, pursuant to Rule 50, and judgment will be entered accordingly.Considered by LITTLETON, SMITH, and LOVE.