Bonus exhaustion rule after Commissioner v. Engle

Journal Article · Sat Mar 01 04:00:00 EST 1986 · Oil Gas Tax Q.; (United States)

OSTI ID:5997983

Tucker, M J; Price, J R

The US Supreme Court held in Commissioner v. Engle that the percentage depletion allowances for oil and gas does not require current production. This makes it available against advance royalty and/or bonus income received in consideration for assigning or leasing oil and gas interests even if there was no production. The authors discuss the circumstances of that position and the implication in the decision for the computation of the depletion deduction. The example demonstrates that an allocated portion of the taxes paid as a bonus with respect to mineral property must be included in determining the gross income in order to compute the limitation on the percentage depletion allowance of 50% of taxable income computed without the allowance for depletion.

• Research Organization: Touche Ross and Co., Tulsa, OK
• OSTI ID: 5997983
• Journal Information: Oil Gas Tax Q.; (United States), Journal Name: Oil Gas Tax Q.; (United States) Vol. 34:3; ISSN OGTQD
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
021000* -- Petroleum-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
294002 -- Energy Planning & Policy-- Petroleum
ACCOUNTING
CALCULATION METHODS
CASE LAW
DEPLETION ALLOWANCES
HISTORICAL ASPECTS
INDUSTRY
LAWS
LEGAL ASPECTS
NATIONAL ORGANIZATIONS
PETROLEUM INDUSTRY
TAX LAWS
US DEPARTMENT OF TREASURY
US IRS
US ORGANIZATIONS