Wildschutz

The Commissioner redetermined the tax of the petitioner for the year 1922 showing a deficiency in the tax of $1,441.09, resulting from the addition to the income of the petitioner for that year of $12,664.68 as the value of a royalty agreement received in exchange for 784 shares of stock theretofore owned by the petitioner in Green-Wild-sehutz Royalty Company.' The Commissioner fixed the value of this royalty contract at $12,664.68, and this determination was not questioned by the petitioner, whose eonten-tention is that the value of the stock and the value of the royalty contract are substantially identical with the difference of $678.45, which difference he concedes is taxable as income. In order to understand the contention of the respective parties, it will be necessary to make a further statement of the facts.

Petitioner was the owner of a homestead entry upon land in Fergus county, Mont. He entered into an agreement with Frank Frantz to develop the lands for oil and gas purposes, reserving a five per cent, royalty. His neighbors, Green and Robinson, had made similar arrangements for the development of their lands, and the three decided to pool their interests and organize a…