Simons Brick Co. v. Commissioner

Petitioner is a California, corporation engaged in the business of manufacturing brick aud tile. Prior to March 3, 1933, the corporation had acquired four tracts of clay land. The present controversy relates solely to tho proper rate at which the allowance for depletion of these lands shall be computed. Tho Board of Tax Appeals determined that a reasonable allowance for depletion was $.0144 peí- ton. The petitioner claims a rate of $.14.

Tho applicable statute is section 234(a) (9), Revenue Acts of 1938 and 1921 (40 Slat. 1077 and 42 Stat. 254 ), which provides:

“Sec. 234. (a) That in computing tho net income of a corporation subject to the tax imposed by section 230 there shall be allowed as deductions: r A‘ :

"(9) In the ease of mines, oil and gas wells, other natural deposits, and timber, a reasonable allowance for depletion and for depreciation of improvements, according to the peculiar conditions in each case, based upon cost including- cost of development not otherwise deducted: Provided,' That in the case of such properties acquired prior to March 1-, 1913, the fair market value of tho property (or the taxpayer’s interest therein) on that date shall be taken in lieu of…