Percentage depletion of advance royalties and lease bonuses under IRC section 613A

Journal Article · Sun May 01 04:00:00 EDT 1983 · La. Law Rev.; (United States)

OSTI ID:7075572

Roussel, R P

Percentage depletion is a statutory deduction allowed to the owner of an economic interest in minerals and computed as a specific percentage of the gross income derived from the property. A review of three court cases concludes that the Seventh Circuit Court's interpretation that production includes future as well as current and past production is the broadest. Because physical extraction and receipt of income rarely occur at the same time, the timing problem is avoided if production is linked to gross income. This also avoids the problem of distinguishing between past and future production. An interpretation allowing percentage depletion in the former case only is based on public policy instead of logic. The author recommends adopting the Seventh Circuit interpretation of 613A of the Internal Revenue Code because it creates the fewest practical problems and avoids redefining a lease bonus or any hybrid arrangements. 142 references.

• OSTI ID: 7075572
• Journal Information: La. Law Rev.; (United States), Journal Name: La. Law Rev.; (United States) Vol. 43:5; ISSN LLRED
• Country of Publication: United States
• Language: English

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29 ENERGY PLANNING, POLICY, AND ECONOMY
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PUBLIC POLICY
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ROYALTIES
TAXES