Alphonzo E. Bell Corp. v. Commissioner

Taxpayer petitions to review a decision of the Board of Tax Appeals (now called the Tax Court) determining a deficiency in its income tax for the calendar year 1938.

Facts found by the Board and unchallenged by the parties are as follows. In 1938 petitioner, a California corporation, owned certain oil lands in Los Angeles County, herein termed the Bell property. The property was leased by Union Oil Co. of California, herein called Union, which agreed to pay petitioner a royalty of one-sixth of the production from the lands. Union was also lessee of certain adjoining oil property owned by a group of individuals, herein called the Alexanders, and of lands known as Bell A adjoining the Alexander property. A long,- narrow plot just south of the Alexander tract was leased by the Bell View Oil Syndicate, herein termed the Syndicate. Six producing wells, known as Grohs Wells Nos. 1 to 6, inclusive, were located on the Syndicate property.

In 1935 petitioner brought an action in a California state court against the Syndicate and its trustees alleging that the producing areas of Grohs Wells Nos. 2 and 3 were under petitioner’s property. Its third amended complaint charged in part that…