BURNET V. A. T. JERGINS TRUST, 288 U. S. 508 (1933)

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U.S. Supreme Court

Burnet v. A. T. Jergins Trust, 288 U.S. 508 (1933)

Burnet v. A. T. Jergins Trust

No. 541

Argued February 15, 16, 1933

Decided March 13, 1933

288 U.S. 508


1. A city made an oil and gas lease to a private party, covering part of a tract owned by the city and used by it for water supply and other purposes. Under the lease, the oil and gas recovered were sold by the parties jointly and the proceeds were divided in stated proportions between them. Held that a federal tax on the receipts of the lessee was not invalid, since the subject taxed was so remote from any governmental function that the effect of the exaction on the city's activities was inconsiderable, and its collection was consistent with, and did not trench upon, the immunity of the state as a sovereign. P. 288 U. S. 514.

2. In determining net income under the Revenue Act of 1921, capitalized expenses for drilling and developing oil wells may not be deducted from gross income as depreciation allowance. United states v. Dakota-Montana Oil Co., ante, p. 288 U. S. 459; Petroleum Exploration v. Burnet, ante, p. 288 U. S. 467. P. 288 U. S. 516.

61 F.2d 92 reversed.

Certiorari to review a judgment reversing a decision of the Board of Tax Appeals, 22 B.T.A. 551.

Page 288 U. S. 512

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