Court Opinion

ID: 4478771
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:13:17.071085+00
Date Added: 2024-06-11T15:04:31.168133
License: Public Domain

Murdock J., dissenting: The miners were not employees of the petitioner and are described in their agreement with the petitioner as independent contractors. ■ That agreement gave the miners rights to mine for a definite term. It provided that the petitioner should act as agent for the miners in selling the ore to the Government and the petitioner could retain, as payment from the miners for the agreement, one-third of the price collected on behalf of the miners. Thus, only the amount retained by the petitioner was its “gross income from the property,” the measure for percentage depletion to the petitioner. The Commissioner has allowed the petitioner percentage depletion based upon one-third of the income from the property, thus conceding an economic interest in the property. However, the petitioner has the burden of proving its right to a larger deduction. The record does not show any investment in the ore in place by the petitioner or the terms of the agreement with the Government under which the petitioner acquired alleged rights to the ore in place. Thus the terms of that agreement cannot be compared by the Court with those of the agreement between the petitioner and the miners. This record does not justify a finding that the petitioner did not transfer to the miners by their agreement a part of whatever economic interest the petitioner had in the property. I do not believe the petitioner has shown that it is entitled to percentage depletion based upon the entire amount which the Government paid for the ore. Turner and Withet, JJ.: agree with this dissent.