J. E. Riley v. R. L. Douglass, Collector of Internal Revenue, Gertrude B. Riley v. R. L. Douglass, Collector of Internal Revenue

This is a consolidated appeal of the separate cases of a husband and his wife on an income tax depletion-gross income question decided in the United States District Court of Nevada in favor of a collector of internal revenue.

J. E. Riley and Gertrude B. Riley, husband and wife, operated during the latter part of 1943 and during 1944 in Humboldt County, Nevada, what is known as the Riley mine, a low grade tungsten mine. Production was made economically possible for the two years in question by a federal government program of purchase of strategic metals through Metals Reserve Corporation, a subsidiary of the government’s Reconstruction Finance Corporation. Rileys were “new producers” as defined by the government subsidiary. All of their production went to Metals Reserve during the two years under review.

The operation of Rileys was about as follows: They removed crude ore from the mine and trucked it to a government stockpile of crude ore located at the Pin-son ranch, about two miles distant from the Riley mine. Eventually the government caused the ore to be removed to the Getchell mill which is described as about four miles from the Riley mine. The Getchell mill was privately…