Percentage depletion allowance alternative to Engle and Glass

Journal Article · Wed Dec 01 04:00:00 EST 1982 · Oil Gas Tax Q.; (United States)

OSTI ID:6353431

Orbach, K N; Dickens, T L; Fields, K T

Recently, the Seventh Circuit, reversing the Tax Court, held that advance royalties are eligible for percentage depletion even though no oil or gas is produced in the year of payment. In the appellate court's view, Internal Revenue Code Section 613A (c) is a limitation, rather than a prerequisite, to the deduction. The Tax Court, to the contrary, had held that advance royalties do not qualify for percentage depletion in the year of receipt unless there is actual production in such year attributable to the gross income. Likewise, the Tax Court has held that a lease bonus is not subject to percentage depletion. The purpose of this article is to analyze the positions of the Tax Court, Seventh Circuit, and, to a limited extent, the Internal Revenue Service with respect to the eligibility of percentage depletion for advance royalties and lease bonuses. (JMT)

• OSTI ID: 6353431
• Journal Information: Oil Gas Tax Q.; (United States), Journal Name: Oil Gas Tax Q.; (United States) Vol. 31:2; ISSN OGTQD
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
021000* -- Petroleum-- Legislation & Regulations
03 NATURAL GAS
031000 -- Natural Gas-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
293000 -- Energy Planning & Policy-- Policy
Legislation
& Regulation
294002 -- Energy Planning & Policy-- Petroleum
294003 -- Energy Planning & Policy-- Natural Gas
DEPLETION ALLOWANCES
INDUSTRY
LAWS
LEGAL ASPECTS
NATIONAL ORGANIZATIONS
NATURAL GAS INDUSTRY
PETROLEUM INDUSTRY
TAX LAWS
TAXES
US DEPARTMENT OF TREASURY
US IRS
US ORGANIZATIONS