VAN OOSTERHOUT, Circuit Judge.
These actions, consolidated for trial and upon appeal, are for the recovery of federal income taxes alleged to have been [130]*130illegally assessed and collected for the years 1946 through 1951. Timely refund claims were filed and disallowed. These suits were commenced within the time permitted by law. The defendant in each action is the collector of internal revenue in office at the time the tax was paid. The collectors represented the Commissioner and acted under his direction. For convenience and simplicity, we will hereafter refer to the Commissioner as the defendant.
This court has jurisdiction to consider these appeals. 28 U.S.C.A. § 1291.
The trial court’s memorandum opinion, reported at 174 F.Supp. 176, contains quite a complete statement of the pertinent facts. A full discussion of the complicated facts would unduly extend this opinion. We will discuss the essential facts during the course of this opinion.
The basic issue presented by these appeals is whether the taxpayer has established a right to a depreciation deduction based upon ( exhaustion of its right-of-way easements for its pipe lines used to transmit gas for considerable distances.
Plaintiff was incorporated in 1930 and since that time has been engaged in the business of acquiring natural gas from fields in Texas, Oklahoma and Kansas, and transporting it for sale by means of its pipe lines to customers in Nebraska, South Dakota, Iowa and Minnesota. Its operations are regulated and licensed by the Federal Power Commission.
Plaintiff’s pipe lines were constructed over lands owned by others pursuant to easements granted plaintiff, which provide that the easements shall continue “so long as such pipe lines and appurtenances thereto shall be maintained.”
The expenditures capitalized as right-of-way costs include roddage paid to grantors, payments for consent of tenants, notary fees, recording fees, abstract fees, legal fees and other expenses incurred in securing the easements. There is no dispute as to the validity of the amount capitalized as right-of-way costs which aggregated $938,004.49 in 1946 and had grown to $1,509,272.04 in 1951.
During all of the taxable years here involved, plaintiff on its books included its right-of-way costs in its depreciable operating property, and charged current income for the recovery of the cost of right-of-way at the rate of 3%% per year, and likewise deducted depreciation on such basis in its income tax returns.
From 1930 to 1943 the Commissioner permitted taxpayer to deduct depreciation on its pipe line right-of-way. Taxpayer was informed that the Commissioner had changed his position to conform to an unpublished ruling pertaining to pipe line depreciation, a copy of which ruling taxpayer was unable to obtain.
Plaintiff contends that it is entitled to a right-of-way depreciation deduction based upon exhaustion by virtue of Section 23 of the Internal Revenue Code of 1939, 26 U.S.C.A. § 23, which so far as here material provides:
“Deductions from gross income in computing net income there shall be allowed as deductions: * * *
“(I) [As amended by Sec. 121(c), Revenue Act of 1942, c. 619, 56 Stat. 798] Depreciation. A reasonable allowance for the exhaustion, wear and tear (including a reasonable allowance for obsolescence)—
“(1) of property used in the trade or business, or
“(2) of property held for the production of income.”
We shall first consider some general principles applicable to these appeals. It is well established that the Commissioner’s determination is presumptively correct. The burden is upon the taxpayer to show that it is erroneous. Welch v. Helvering, 290 U.S. 111, 115, 54 S.Ct. 8, 78 L.Ed. 212; Union Electric Co. v. Commissioner, 8 Cir., 177 F.2d 269, 273.
“In a non jury case, this Court may not set aside a finding of fact of a trial court unless there is no substantial evidence to sustain it, [131]*131unless it is against the clear weight of the evidence, or unless it was induced by an erroneous view of the law.” Neely v. Boland Manufacturing Co., 8 Cir., 274 F.2d 195, 201; Cleo Syrup Corporation v. Coca-Cola, 8 Cir., 139 F.2d 416, 418, 150 A.L.R. 1056.
We fully agree with the government’s contention that an allowance for deductions from gross income does not turn upon general equitable considerations. Deductions are a matter of legislative grace and statutory authority must be found for such deductions. Deputy v. duPont, 308 U.S. 488, 493, 60 S.Ct. 363, 84 L.Ed. 416; Greenspon v. Commissioner, 8 Cir., 229 F.2d 947, 954.
We believe that the taxpayer has met all of the requirements of the authorizing statute in proving its claim here asserted. The right-of-way here involved constitutes property. The parties concede that the right-of-way is intangible property and we shall so assume. We observe here, however, that the statute itself makes no distinction between tangible and intangible property. If the taxpayer’s income producing property is undergoing exhaustion, the statute authorizes a depreciation deduction. Neither the Commissioner nor the trial court take the position that the right-of-way is a type of property that cannot be subject to exhaustion and hence depreciation. They concede that the time will come when the taxpayer will be entitled to the depreciation deduction and that a deduction is allowable when the duration of the easement can be ascertained with sufficient definiteness.
It is undisputed that the right-of-way is used in the taxpayer’s trade or business and that it is also property held for the production of income. As heretofore stated, the amount of taxpayer’s investment in the right-of-way easement is undisputed.
It is clearly established by the evidence that taxpayer’s right-of-way easements are assets subject to exhaustion. The trial court recognized that the useful life of the rights-of-way depended upon the period of time that the taxpayer’s transmission line could be successfully operated and that this in turn depended on the supply of natural gas available to the taxpayer. The court, among other things, states:
“Natural gas is an irreplaceable natural resource. It is recognized that the production of natural gas must result in its depletion and eventually in the exhaustion of the supply. The point is underscored by the 1948 report of the National Gas Investigation, Federal Power Commission. ‘It is an accepted fact that natural gas is a wasting asset and that for every pool discovered, there is one less to be found.’ ” Northern Natural Gas Co. v. O’Malley, D.C., 174 F.Supp. 176, 180.
“There is no question, from what has been stated, that the taxpayer’s rights-of-way are, in some manner, undergoing exhaustion.” Id., at page 185.
“ * * * accepting that the exhaustion of natural gas reserves is a condition upon which the useful life or value of the rights-of-way would cease, has the taxpayer shown with sufficient definiteness when this condition will occur?” Id., at page 185.
Judged by the express terms of Section 23 (l), the finding of the existence of exhaustion upon the basis of substantial evidence entitles the taxpayer to some allowance for depreciation. The statute contains no provision requiring that the exhaustion must be capable of measurement with any specified degree of definiteness or certainty. The taxpayer’s proof in support of the depreciation deduction will be discussed hereinafter.
The authorizing statute states that deduction “shall” be allowed. “Shall” is ordinarily the language of command. Anderson v. Yungkau, 329 U.S. 482, 485, 67 S.Ct. 428, 91 L.Ed. 436.
It is our belief that the statute authorizing the deduction is mandatory [132]*132and not permissive, and requires the Commissioner to grant the deduction to a taxpayer who brings his claim within the provision of the statute.
In Burnet v. Niagara Falls Brewing Co., 282 U.S. 648, 51 S.Ct. 262, 75 L.Ed. 594, the Supreme Court rejected the Commissioner’s contention that the obsolescence deduction, which arises out of the same statute as the one we are now considering, was not established with sufficient definiteness. In that case the obsolescence was caused largely by the impact of the prohibition amendment upon the brewery business. The court, after stating that tax laws are to be liberally construed in favor of taxpayers, continues:
“It would be unreasonable and violate that canon of construction to put upon the taxpayer the burden of proving to a reasonable certainty the existence and amount of obsolescence. Such weight of evidence as would reasonably support a verdict for a plaintiff in an ordinary action for the recovery of money fairly may be deemed sufficient. Neither the cost of obsolescence nor of accruing exhaustion, wear and tear that is properly chargeable in any period of time can be measured accurately. A reasonable approximation of the amount that fairly may be included in the accounts of any year is all that is required.” At pages 654, 655 of 282 U.S., at page 265 of 51 S.Ct.
In United States v. Ludey, 274 U.S. 295, 47 S.Ct. 608, 71 L.Ed. 1054, the Supreme Court reversed the lower court decision which held that no depletion or depreciation deduction was allowable because the amount of taxpayer’s oil reserves could not be definitely determined. The court states:
“The reserves are recognized as wasting assets. The depletion effected by operation is likened to the using up of raw material in making the product of a manufacturing establishment. As the cost of the raw material must be deducted from the gross income before the net income can be determined, so the estimated cost of the part of the reserve used up is allowed. The fact that the reserve is hidden from sight presents difficulties in making an estimate of the amount of the deposits. The actual quantity can rarely be measured. It must be approximated. And because the quantity originally in the reserve is not actually known the percentage of the whole withdrawn in any year, and hence the appropriate depletion charge, is necessarily a rough estimate. But Congress concluded, in the light of experience, that it was better to act upon a rough estimate than to ignore the fact of depletion.” At page 302 of 274 U.S., at page 610 of 47 S.Ct.
“ * * * It is argued that, because oil is a fugacious mineral, it cannot be known that the reserve has been diminished by the operation of wells. Perhaps some land may be discovered which, like the widow’s cruse, will afford an inexhaustible supply of oil. But the common experience of man has been that oil wells, and the territory in which they are sunk, become exhausted in time. Congress in providing for the deduction for depletion of oil wells acted on that experience. Compare Lynch v. Alworth-Stephens Co., 267 U.S. 364 [45 S.Ct. 274, 69 L.Ed. 660], In essence, the deduction for depletion does not differ from the deduction for depreciation.” At page 303 of 274 U.S., at page 611 of 47 S.Ct.
The Board of Tax Appeals in Illinois Pipe Line Co. v. Commissioner, 37 B.T. A. 1070, at page 1080, states:
“Deductions for depreciation are dependent upon estimates and never can be absolutely accurate.”
Both the Commissioner and the taxpayer cite the case of Union Electric Co. v. Commissioner, supra, in support of their respective contentions. While the factual situation in Union Electric is not [133]*133exactly the same as here presented, the case comes as close as any that we have found bearing upon our present problem. In Union Electric, the property as to which exhaustion was claimed and allowed, was the right-of-way used for transmission lines carrying the electricity from its source in the Bagnell Dam to St. Louis. The court there found that the easements had no value except as they were used in connection with the power plant at the dam and that the easements would become useless when that source of electricity ceased to exist.
Similarly, here the pipe line right-of-way will be without value when there is no gas to transport. The statute and regulation considered in Union Electric were substantially the same as those here involved. It is true, as the government contends, that the court treated regulation 29.23(0-3 hereinafter set out, as valid. No attack was made in that case upon the regulation. The Tax Court in Union Electric had found that the useful life of the dam was 100 years. No discussion appears in the opinion as to the meaning of the words “definitely limited” or “reasonable certainty”, in connection with the estimate of the duration of the source of electric power. The government accepted the Tax Court’s finding as to the useful life of the dam. It is obvious that the period of duration of the dam could not be determined with any degree of exactness. The Tax Court, to arrive at its duration determination, necessarily gave the words “definitely limited” and “reasonable certainty” a rather broad interpretation.
An important factor in determining the usefulness of the dam was the period of time that would be required for the lake bed to fill with silt and render the dam useless. When this would occur was dependent on many unknown and uncertain factors. If it is possible to estimate the life of a dam within the meaning of the statute, it should be equally possible to estimate the life of gas reserves.
It should be noted that Union Electric is definite authority for the proposition that transmission line rights-of-way created for a limited period are under appropriate circumstances subject to depreciation deduction for exhaustion.
The Commissioner in support of his contention that the court properly denied the deduction does not rely upon the statute above cited and quoted, but places his reliance upon Regulation 111, Sec. 29.23(l)-3, which reads:
“Depreciation of Intangible Property. — Intangibles, the use of which in the trade or business or in the production of income is definitely limited in duration, may be the subject of a depreciation allowance. Examples are patents and copyrights, licenses, and franchises. Intangibles, the use of which in the business or trade or in the production of income is not so limited, will not usually be a proper subject of such an allowance. If, however, an intangible asset acquired through capital outlay is known from experience to be of value in the business or in the production of income for only a limited period, the length of which can be estimated from experience with reasonable certainty, such intangible asset may be the subject of a depreciation allowance. * * ”
The trial court’s opinion appears to be based largely upon its interpretation of the regulation just cited, rather than upon the statute. The trial court thus states the issue:
“The first issue encountered, as restated in the language of the regulation, is whether the use of the easements is definitely limited in duration or, if not, whether the easements are known to be of value in the business for only a limited period, the length of which can be estimated from experience with reasonable certainty. In either case, if this were so, the asset would by definition be susceptible of measurement and therefore subject to depreciation. * * *
[134]*134“To sharpen the issue, we may say that an intangible asset is by law depreciable when the period over which its full exhaustion will occur is definitely limited, permitting partial exhaustion to be ascertained. But when that time is unsusceptible of measurement, an allowance for depreciation is inappropriate as lacking a justifiable basis. The conclusion follows: it is not enough that the taxpayer show property to be undergoing exhaustion as a basis for claiming a depreciation allowance. The taxpayer must show as well that it is undergoing exhaustion in a definitely limited (i. e., necessarily ascertainable) period of time. The time in which depreciation is occurring, rather than the fact that it is occurring, becomes of crucial importance in the case.” 174 F.Supp. 179, 180.
Statutes are the primary authority for determining the scope of authorized deductions. Trust of Bingham v. Commissioner, 325 U.S. 365 at page 377, 65 S.Ct. 1232, 89 L.Ed. 1670; Manhattan General Equipment Co. v. Commissioner, 297 U.S. 129, at page 134, 56 S.Ct. 397, 80 L.Ed. 528; Boykin v. Commissioner, 8 Cir., 260 F.2d 249, at page 254.
The rule that applies, as stated by the Supreme Court in Manhattan General Equipment Co., supra, at pages 134 and 135 of 297 U.S., at page 400 of 56 S.Ct., is as follows:
“The power of an administrative officer or board to administer a federal statute and to prescribe rules and regulations to that end is not the power to malee law, for no such power can be delegated by Congress, but the power to adopt regulations to carry into effect the will of Congress as expressed by the statute. A regulation which does not do this, but operates to create a rule out of harmony with the statute, is a mere nullity. * * *
“ * * * The statute defines the rights of the taxpayer and fixes a standard by which such rights are to be measured. The regulation constitutes only a step in the administrative process. It does not, and could not, alter the statute.”
The primary function of a regulation is to interpret an ambiguous statute and clarify its meaning. If the statute is unambiguous, there is no room for construction. A right clearly created by statute cannot be taken away by regulation. Helvering v. Oregon Mutual Ins. Co., 311 U.S. 267, 61 S.Ct. 207, 85 L.Ed. 180; Koshland v. Helvering, 298 U.S. 441, 56 S.Ct. 767, 80 L.Ed. 1268; Helvering v; Northwestern Nat. Bank & Trust Co., 8 Cir., 89 F.2d 553; Slough v. Commissioner, 6 Cir., 147 F.2d 836; Walling v. Baltimore Steam Packet Co., 4 Cir., 144 F.2d 130; Busey v. Deshler Hotel Co., 6 Cir., 130 F.2d 187, 142 A.L.R. 563.
Mertens, Law of Federal Income Taxation, Volume I, § 3.21, states:
“The Treasury may not malee an arbitraxy or unreasonable Regulation, nor can it restrict or enlarge the scope of a statute.”
Numerous authorities are cited in footnote 82 in support of the text.
In interpreting a regulation, courts will ordinarily avoid a construction which raises doubt as to the validity of the regulation. Newman v. Commissioner, 5 Cir., 76 F.2d 449, 452; Mertens, Law of Federal Income Taxation, Volume I, § 3.21.
The depreciation deduction authorized by Section 23(0 of the Code by its terms applies to a broad field of propex~ty. However, all property is not subject to depreciation based upon exhaustion. It is well established that x’eal estate exclusive of the improvements thereon is not subject to exhaustion, and hence not subject to depreciation. As Judge Blackmun points out in his concurring opinion, courts have rather uniformly held that property such as good will, subscription lists and perpetual fx-anchises, is not subject to depreciation deduction.
[135]*135It must be conceded that the regulations serve a useful purpose in providing guidance for the determination of the type of property subject to depreciation and the method of computation of allowable depreciation. The regulations, to the extent that they are not inconsistent with the rights granted by statute, must be respected and followed.
The writer fully agrees with the view expressed by Judge Blackmun that Regulation 29.23(0-3 cannot be viewed and interpreted in isolation. The regulation is part of a group of comprehensive regulations dealing with the depreciation deduction and all such regulations should properly be construed together as a whole. As Judge Blackmun points out, Regulations 29.23(l)-3, 29.23(l)-5, and 29.23(m)-9 are especially pertinent to the interpretation problem presented by this case.
For the reasons hereinafter pointed out, and for the additional persuasive reasons set out by Judge Blackmun in his concurring opinion, we do not believe that the pertinent regulations when fairly interpreted are repugnant to the right to the depreciation deduction granted by statute, and hence the question of the invalidity of the regulation, upon the ground that the regulations are inconsistent with the statute they interpret, is not reached for decision.
The government urges that the rights-of-way do not meet the standard of the regulation requiring the asset to be definitely limited in duration. It is true that the easements contain no provision to the effect that the easements are granted only for a specific number of years, and it is likewise true that no one can say with absolute certainty the number of years that the rights-of-way may be useful to the taxpayer for purposes of transporting gas. We do not believe that the regulation requires proof of the exact number of years the easements will continue. We believe that all that is required is definite proof that the asset is one definitely undergoing exhaustion. The evidence clearly establishes that the rights-of-way will be useful for taxpayer’s purposes for only a limited period, and the court so found. The uncertainty relates to the length of the period. Moreover, Regulation 1.167 (a)-3,1 under Income Tax Regulations, 1954, interpreting Section 167(a) of the Internal Revenue Code of 1954, 26 U.S. C.A. § 167(a) which is substantially the same statute as 23 (1) here under consideration, eliminates the word “definitely” preceding the word “limited”.
The government appears more especially to rely upon the words in the fourth sentence of Regulation 29.23(l)-3 limiting the depreciation allowance to intangible assets “known from experience to be of value in the business or in the production of income for only a limited period, the length of which can be estimated from experience with reasonable certainty.” “Estimate” has been defined as “to fix the worth, value, size, extent, etc., roughly or in a general way.” Webster’s New International Dictionary, 2d Ed. The word “reasonable” modifying the word “certainty” is a flexible word frequently used in law. Reasonable care, reasonable time, reasonable doubt, are illustrations of the use of the modifying word “reasonable”.
In Diamond Alkali Co. v. Heiner, 3 Cir., 60 F.2d 505, 512, where the court was concerned with the meaning of reasonable deduction for amortization, the court said:
“While a ‘reasonable’ allowance is not defined in the statutes, we have hereinabove defined it as one that is just, fair, and equitable.”
In Le Cuno Oil Co. v. Smith, Tex.Civ.App., 306 S.W.2d 190, at page 195, we find:
“ ‘Reasonable’ has had many definitions by the courts and its mean[136]*136ing is shaded and varied by the context in which it is used, it is a relative term and the facts of a particular controversy may affect its meaning, frequently it is used to mean just, fair, honest or equitable. 36 Words and Phrases, Reasonable, p. 258.”
Regulation 111, 29.23(l)-5, provides in part:
“Method of Computing Depreciation Allowance. — -The capital sum to be recovered shall be charged off over the useful life of the property, either in equal annual installments or in accordance with any other recognized trade practice, such as an apportionment of the capital sum over units of production. Whatever plan or method of apportionment is adopted must be reasonable and must have due regard to operating conditions during the taxable period. The reasonableness of any claim for depreciation shall be determined upon the conditions known to exist at the end of the period for which the return is made. If the cost or other basis of the property has been recovered through depreciation or other allowances no further deduction for depreciation shall be allowed. The deduction for depreciation in respect of any depreciable property for any taxable year shall be limited to such ratable amount as may reasonably be considered necessary to recover during the remaining useful life of the property the unrecovered cost or other basis.”
The trial court, in dealing with the regulation just cited, states:
“Once it is ascertained that the useful life of the assets is susceptible of measurement, time-wise, it is true that the amount (or rate) of depreciation proposed to be taken need only be shown as reasonable. There is no requirement that it must be ascertained to a certainty. The question is settled by Section 29.23(l)-5, Treasury Regulation 111, which concerns the amount of depreciation to be taken on depreciable property.” 174 F.Supp. at page 179.
The trial court took the position that the regulation applied only after it had first been definitely established by evidence that the useful life of the right-of-way is susceptible of measurement, time-wise. The court’s opinion as a whole reflects that it applied a strict and rigid standard in determining whether the period of exhaustion had been established. On some eight occasions in the course of his opinion, in speaking of the period of exhaustion, the court uses words such as “definitely limited”, “definitely ascertainable”, “fixed time”, and “definite time”. The court states that Regulation 29.23(I)-5 cannot be considered in determining the right to a deduction but only becomes operative after such right is established. No cases are cited or found supporting the trial court’s position in this respect. We can see no reason why the provision of the regulation cannot be considered along with other 'factors in determining the existence of depreciation.
In Denise Coal Co. v. Commissioner, 3 Cir., 271 F.2d 930, 936, a coal company doing strip mining was required by state statute to rehabilitate the stripped land, upon the completion of the mining operation. The Commissioner and the Tax Court denied a deduction for the recovery of the estimated rehabilitation cost, on the basis that such cost could not be accurately estimated with reference to the time that might be required or as to cost. In reversing, the Court of Appeals states:
“We do not think that we should expect from taxpayers in this case, or any other, the ability to estimate cost of this kind with mathematical precision. At best it must be an estimate and if made reasonably should be allowed even though the estimate proves too small or too large. The taxpayer on an accrual system of accounting will not have his books ‘clearly reflect’ the state of his income if he does not make [137]*137such a reserve, and the statute requires that a taxpayer’s books shall ‘clearly reflect’ his income. Int.Rev. Code of 1939, § 41, 26 U.S.C. § 41. We think it is good business and good accounting and, therefore, ought to be good tax law to allow a reasonable estimate to be set up as a reserve for the fulfillment of this statutory obligation.”
When, as here, a decision turns upon the meaning of words in a statute or regulation, a legal question is presented. Trust of Bingham v. Commissioner, 325 U.S. 365, 65 S.Ct. 1232, 89 L.Ed. 1670. At page 371 of 325 U.S., at page 1236 of 65 S.Ct. of the case just cited, the court states:
“Since our decision in the Dobson case [Dobson v. Commissioner, 320 U.S. 489, 64 S.Ct. 239, 88 L.Ed. 248] we have frequently reexamined, as matters of law, determinations by the Tax Court of the meaning of the words of a statute as applied to facts found by that court.”
Numerous supporting cases are cited in a footnote.
We are convinced that the trial court committed error in construing too narrowly the right to depreciation given the taxpayer by the statute and regulations heretofore discussed, and hence we believe that its decision was induced by an erroneous view of the applicable law.
The taxpayer offered voluminous and specific evidence as to its reserves. Evidence, expert and otherwise, as to the reserve life of its gas supply was also offered. The reserve life is computed upon several theories. Much of the evidence as to reserves and reserve life is set out in the trial court’s opinion. With reference to the evidence, the trial court made, among others, the following observations :
“Should our inquiry be limited to a consideration of the reasonableness of the rate of depreciation, this Court would not hesitate to say that the taxpayer has gone a long way
towards establishing its case.” 174 F.Supp. at page 178.
“These factors appear to indicate that the proven reserves ought not be considered available for long distance transmission to the extent that the reserve life tables suggest. The taxpayer estimated that, all things considered, its proven reserves at the end of each of the taxable years were adequate only for a period somewhere between 14 or 15 and 25 years.” Id., at page 184.
“In resting its case upon the annual estimate of reserves, we are aware that the taxpayer was following the requirements of the Federal Power Commission. This is the basis for passing upon such matters as the taxpayer’s applications for certificates of extensions of facilities or the adequacy of proposed rates for gas to be sold. It is also the basis used by the taxpayer in preparing-registration certificates for the Securities and Exchange Commission, and for reporting information to investors and prospective investors in the taxpayer’s securities. Generally it is the basis used by management in the conduct of the affairs of its business; in turn, all of the agencies, investors, and financial institutions with which the taxpayer deals base their action on the reserves owned or controlled by the taxpayer.” Id., at page 189.
We have examined the record and believe that the taxpayer has produced all the evidence that was reasonably available to it bearing upon the quantity and life of its reserves. Our examination of the trial court’s opinion leads us to believe that he reached a similar conclusion. The trial court, however, apparently was of the view that a different standard is imposed in tax cases, and that proof that would satisfy other agencies as to the extent and duration of the reserve would not serve such purpose in the present case. We have no doubt that Congress could specify that differ[138]*138ent standards be used in determining reserves and reserve life in tax cases. However, Congress has not prescribed any special standards to be considered in the depreciation field. We therefore believe evidence that is sufficient to establish reserves and reserve life in proceedings before the Federal Power Commission, the Securities and Exchange Commission, and for general purposes, should afford sufficient evidence for tax purposes. See Burnet v. Niagara Falls Brewing Co., supra.
The court also found that there was no inseparable connection between taxpayer’s proven reserves and its pipe line rights-of-way, so that the estimated life of the reserves does not measure the period of usefulness of the pipe line rights-of-way to the taxpayer. There is in the record evidence to the effect that as time progressed the taxpayer acquired additional reserves both by purchase and by development of its own leases. Such increased reserves are offset to considerable extent by the enlargement of the taxpayer’s pipe line facilities and the corresponding increase in gas sales.
The taxpayer insists that it is entitled to have depreciation determined in accordance with the provisions of Regulation 29.23(0-5, heretofore quoted, particularly that part stating that depreciation should be determined upon conditions known to exist at the end of the tax period for which the return is made. We believe that the taxpayer’s contention in this respect finds support in our decision in Union Electric, supra. In that case this court rejected the Commissioner’s contention that a new dam or source of power might be available after 100 years, stating:
“In this the Commissioner does not take into account the principle that the right to deductions for depreciation does not depend upon mere possibilities. Commissioner v. Philadelphia Coke Co., 3 Cir., 130 F.2d 87, certiorari denied 317 U.S. 685, 63 S.Ct. 259, 87 L.Ed. 549. It may be that after 100 years another dam will replace the present one but it is also possible that the reservoir will at that time be filled with, silt rendering the construction of a new dam useless. The finding of the Tax Court that all these rights are inseparably linked with the useful life of the present dam and that their costs are and should be considered as a part of the depreciable costs of the plant is a reasonable conclusion based upon conceded or established facts.” 177 F.2d at page 275.
The possibility in Union Electric that a new dam might be built to create additional power is analogous to the Commissioner’s contention here that new sources of gas reserves may later be found.
There is likely a basis for a difference of opinion under the evidence in this case as to the amount of taxpayer's reserves at the end of each taxable year and as to the amount of gas exhausted each year. There are also various formulas used for computing reserve life, as disclosed by the trial court’s opinion, and there is room for dispute as to which formula should be applied. Since the trial court found the taxpayer was entitled to no depreciation on its pipe line right-of-way, the court made no computation of the deduction. There is language in the court’s opinion that tends to indicate that the return claimed by the taxpayer is reasonable if a deduction is allowable. However, the court is not bound by such statement.
Where a taxpayer shows he is entitled to some deduction but cannot definitely show how much, the court should not deny all deduction but should make as close an approximation of the deduction as it can. Cohan v. Commissioner, 2 Cir., 39 F.2d 540; Rugel v. Commissioner, 8 Cir., 127 F.2d 393; Walter M. Joyce, 25 T.C. 13.
The judgment, insofar as it denies taxpayer any deduction for depreciation on its pipe line rights-of-way, is reversed on the ground that such judgment was induced by an erroneous view of the law. The case is remanded to the trial court for the purpose of determining the deduction for depreciation the taxpayer is [139]*139entitled to, and the amount of tax that has been erroneously assessed and collected, and for further proceedings not inconsistent with the views expressed in this opinion.