Court Opinion

ID: 9449933
Source: CourtListenerOpinion
Date Created: 2023-08-04 16:28:09.162644+00
Date Added: 2024-06-11T17:32:03.440901
License: Public Domain

CHAMBERS, Circuit Judge
(dissenting) :
I would affirm.
Before Southwest Exploration, 350 U.S. 308, 76 S.Ct. 395, 100 L.Ed. 347, I would have unhesitatingly concurred in the foregoing opinion.
In this field of depletion we deal with a deduction that has only an occasional accidental relation to the cost of or investment in a wasting asset. The justification for this special consideration is said to be that we must do it to encourage the risk taking necessary to make and keep our country big and strong. I am not wise enough (and it is none of our business) to condemn the law. As a citizen, I think I would favor something like the present law.
But believing that the purpose of the depletion provisions of the Internal Revenue Code was to encourage the man (or the company) to put his money in the hole in the ground was what led me to concur in our opinion in Commissioner v. Southwest Exploration Co., 9 Cir., 220 F.2d 58, in favor of the oil company which did the drilling to the exclusion of him with no oil but who had an access road and the onshore drilling site to reach the offshore oil. But I was wrong.
To me, the Quality Oil (the Thomases), interest as a speculator gave it the same percentage of economic interest in the oil as if it (or they) had been personally liable for development and operating costs. Thus, I would not hold the Thom-ases down to depletion on their net profits, but would let them share the depletion on the difference between the net profit and the gross profit.
If I am wrong again, and that is the evidence today, I am not unhappy with the majority’s result.