United States v. Hercules Mining Co.

The appeal presents the question whether, during the tax years ending June 30, 1934, and June 30, 1935, appellee was carrying on or doing business within the terms of § 701(a) of the Revenue Act of 1934, 1 48 Stat. 680 , 769, 26 U.S.C.A. Int.Rev. Acts, page 787, and was thus subject to capital stock taxes for those years. Upon the denial of its claim of exemption appel-lee paid the taxes and brought this suit for refund.

Appellee was incorporated under the laws of Delaware in 1923 for the purpose of engaging in the business of mining and was thereafter licensed as a foreign corporation in Idaho. It had as its predecessor a mining partnership of the same name which had carried on extensive operations in the Hercules mine and at its milling plant in Shoshone county, Idaho. The corporation took over the property and continued the operations until 1925 when the Hercules ore body became exhausted. For some years afterwards the corporation explored its ground in the hope of discovering possible extensions of the ore bodies, but the exploratory work proved unsuccessful and was discontinued about 1931 or 1932. Following the termination of its productive operations in 1925 the taxpayer…