Oregon Chrome Mines, Inc. v. Commissioner of Internal Revenue

Appellant, Oregon Chrome Mines, Inc., hereinafter referred to as taxpayer, is the owner of certain mining claims situate in Josephine County, Oregon. These claims contain chrome ore, a strategic metal. In peace time the metal is imported because it cannot be mined at a profit in competition with production in certain foreign countries.

Congress, recognizing the necessity of providing an incentive to spur production in war time, enacted § 731 Internal Revenue Code.

During World War I mining claims covering much the same ground as that covered by mining claims with which we are concerned in the instant case were located and developed to a considerable extent. Some time after the conclusion of the first world war the then owners permitted the claims to lapse and revert to the Government. This mining ground was subsequently located and, on June 24, 1941, was transferred to taxpayer. Subsequent to acquiring title to the claims and prior to April 12, 1942, taxpayer engaged in active development of its mining claims. This work consisted of tunnel work, drifting, raising and cross-cutting. No direct evidence appears in the record as to whether the development work carried on by taxpayer…