Consolidated Chollar Gould & Savage Min. Co. v. Commissioner

Petitioner seeks a review of a decision of the United States Board of Tax Appeals, now Tax Court of the United States, sustaining a deficiency in income taxes for the tax years 1936 and 1938, computed by the respondent. The deficiency is based on the disallowance of a deduction claimed by petitioner from gross income “from the extraction of gold by the petitioner from certain dumps consisting of rocks and ore material which had never been milled or processed in any way but which had been deposited upon lands owned by the petitioner [from mines not located on such lands] many years prior to the acquisition of said lands by the petitioner.”

The deduction is a matter of legislative grace, White v. United States, 305 U.S. 281, 292 , 59 S.Ct. 179 , 83 L.Ed. 172 ; New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 , 54 S.Ct. 788 , 78 L.Ed. 1348 , and the petitioner must bring itself clearly within the statute under which the deduction is claimed. It relies upon

Ҥ 23. Deductions from gross income.

In computing net income there shall be allowed as deductions:

* * * * *

“(m) Depletion. In the case of mines, oil and gas wells, other natural deposits, and timber, a reasonable…