Crawford

Petitioner seeks a review of the Tax Court’s order holding that the taxpayer, owner of California oil land, who has made two leases of portions thereof to the Standard Oil Company of California, the lessee to drill for and produce oil therefrom, which leases are terminable by breach of the drilling and other agreements of the lessee, is entitled to depletion deductions for the agreed royalty of a percentage of the net profits of the lessee from its sale of oil extracted from the leased land. The tax years in question are 1938, 1939, and 1940.

The Tax Court relied, in part, upon our decision in Commissioner of Internal Revenue v. Felix Oil Co., 144 F.2d 276 , in which we decided that such a lessor is entitled to such deductions for the tax years 1938 and 1939 as a part of the “gross income from the property” under § 114(b) (3) of the Revenue Code. 26 U.S.C.A. Int.Rev.Code, § 114(b) (3). This same section is controlling for the tax year 1940.

Petitioner’s brief and argument in the instant case present the same argument, based upon the same authorities, as in the Felix case, save that it cites the recent case of Commissioner of Internal Revenue v. Kirby Petroleum Co., 5 Cir., 148…