Walsh v. Commissioner

135 F.2d 701, 31 A.F.T.R. (P-H) 53, 1943 U.S. App. LEXIS 3356

Opinions

McCORD, Circuit Judge.

The parties are different, but the issue here involved is identical with that presented and decided as to the Richter “B” Lease transaction in the recent case of Hardesty v. Commissioner, 5 Cir., 127 F.2d 843. The wells were drilled as consideration for the transfer of an interest in the lease, and the intangible drilling and development costs constitute a capital expenditure and may not be deducted as ordinary and necessary business expenses. See Commissioner v. Rowan Drilling Co., 5 Cir., 130 F.2d 62; United States v. Sentinel Oil Company, 109 F.2d 854, certiorari denied 310 U.S. 645, 60 S.Ct. 1095, 84 L.Ed. 1412.

On the authority of Hardesty v. Commissioner, supra, the decision of the Board is affirmed.