Emil Usibelli and Rose P. Usibelli v. Commissioner of Internal Revenue

This case is before us on petition for review of a decision of the Tax Court of the United States and involves a claimed allowance of a depletion deduction under Section 23(m) of the Internal Revenue Act of 1939 to petitioner for certain government coal lands which he strip-mined pursuant to a contract with the United States Army. Except where otherwise stated in this opinion, the term “petitioner” refers to petitioner Emil Usibelli.

On April 5, 1946, special permission was granted by the Secretary of the Interior to the United States Army to mine coal from specified government land in Alaska. Unless otherwise terminated, the permit would expire six months after the cessation of hostilities in World War II as determined by Presidential proclamation or concurrent Congressional resolution. Under the terms of this permit the actual mining could be done either by the Army or by private parties under contract with the Army.

On July 1,1946, the Army entered into a one-year contract with petitioner (Emil Usibelli) to strip-mine coal on the specified government lands at Suntrana, Alaska, for supplying coal to the Army at Ladd Field, Alaska. The coal was to consist of 40,000 tons of mine…