Lamm Lumber Co. v. Commissioner

Petitioner taxpayer, an Oregon corporation, seeks review of an order of the United States Board of Tax Appeals upholding a determination of a deficiency in taxpayer’s income tax for the tax year 1936. The Commissioner’s determination was based upon a disallowance of a deduction made in taxpayer’s return for depletion of timber cut in that year from a tract of approximately 300,000,000 feet, principally pine, in Klamath and Lake Counties, Oregon, which timber petitioner had agreed to purchase on December 31, 1932, from the Long-Bell Lumber Company, hereafter called Long-Bell.

Taxpayer claims it had paid $200,-000 as a consideration for the contract of 1932 for the purchase of the timber. It has apportioned this amount evenly over the 300,000,000 total stumpage of the tract, the deduction being for the number of thousand feet of timber cut in 1936 at the rate of 66%0 per thousand. The Board disallowed the claimed deduction on the ground that the $200,000 had not been paid as a consideration for the timber purchased and cut. Taxpayer has the burden of proof that its deduction clearly falls within some deduction provision of the taxing act. White v. United States, 305 U.S. 281, 292 ,…