26 C.F.R. § 1.613-3
Gross income from the property
Oil and gas wells. In the case of oil and gas wells, gross income from the property, as used in section 613(c)(1), means the amount for which the taxpayer sells the oil or gas in the immediate vicinity of the well. If the oil or gas is not sold on the premises but is manufactured or converted into a refined product prior to sale, or is transported from the premises prior to sale, the gross income from the property shall be assumed to be equivalent to the representative market or filed price of the oil or gas before conversion or transportation.
Notes of Decisions
Cited in 16
cases, 1964–1998 · leading case: Barton Mines Corp. v. Comm'r, 53 T.C. 241 (T.C. 1969).
Barton Mines Corp. v. Comm'r, 53 T.C. 241 (T.C. 1969). “613-3(f)(4) and (g)(2), Income Tax Regs. While the issue is hotly contested, we believe the record quite clearly shows that dryer H serves three *54 distinct functions made necessary by the heavy media and flotation processes (both of which are conceded by respondent to…”
Coca-Cola Co. v. Comm'r, 106 T.C. 1 (T.C. 1996). “The Commissioner maintained that the "gross income from property", for purposes of percentage depletion, must not exceed the actual gross income from the sale of gas, and under those circumstances, the Commissioner was entitled to employ a net-back methodology in determining…”
North Carolina Granite Corp. v. Comm'r, 56 T.C. 1281 (T.C. 1971). “Sec. 1.613-3, Income Tax Regs. First, if the integrated producer sells sufficient quantities of minerals in their unprocessed form which are similar to those used in the finished items, the producer can use its own price for computing gross income from mining attributable to the…”
Engle v. Comm'r, 76 T.C. 915 (T.C. 1981). “The illogical result which obtains from interpreting section 613A(c) as requiring extraction in the taxable year is illustrated by the following example.”
Amerada Hess Corp. v. Dir., Div. of Taxation, New Jersey Dep't of the Treasury, 490 U.S. 66 (1989). “” 26 CFR § 1.613-3 (a) (1988). The Act defines “windfall profit” as “the excess of the removal price of the barrel of crude oil over the sum of — (1) the adjusted base price of such barrel, and (2) the amount of the severance tax adjustment with respect to such barrel provided…”
Transco Expl. Co. v. Comm'r, 949 F.2d 837 (5th Cir. 1992). “” 26 C.F.R. § 1.613-3 . If the oil or gas is converted to a refined product before sale, or transported from the premises before sale, gross income is the equivalent of the market or field price of the oil or gas before conversion or transportation.”
Glass v. Comm'r, 76 T.C. 949 (T.C. 1981). “613-3(a), Income Tax Regs. ); and, second, "gross income from the property" is still the percentage depletion calculation base for purposes of applying sec.”
Mesa Petroleum Co. v. Comm'r, 58 T.C. 374 (T.C. 1972). “The gross income from the property in such situations, according to the regulations, "shall be assumed to be equivalent to the representative market or field price of the oil or gas before conversion or transportation.”
Union Tex. Int'l Corp. v. Comm'r, 110 T.C. 321 (T.C. 1998). “) less: *344 all allowable deductions (excluding any deduction for depletion) which are attributable to mining processes, including mining transportation, with respect to which depletion is claimed.”
Carborundum Co. v. Comm'r, 70 T.C. 59 (T.C. 1978). “, defines the term "incidental" to include any process related to a mining process so long as its cost is insubstantial in relation to the cost of the mining process.”
Cities Serv. Gas Co. v. Fed. Power Comm'n, 424 F.2d 411 (10th Cir. 1969). “613-3 (a), 26 C.F.R. 1.613-3(a), define gross income from the property, in the case of gas wells, as the price at which the gas is sold at or near the well, or if it is not so sold gross income from the property “shall be assumed to be equivalent to the representative market or…”
Island Creek Coal Co. v. Comm'r, 43 T.C. 234 (T.C. 1964). “613-3 , less allowable deductions (excluding any deduction for depletion) which are attributable to the mineral property, including allowable deductions attributable to ordinary treatment *239 processes and mining transportation, with respect to which depletion is claimed.”
26 C.F.R. § 1.613-3(a): 2 cases
Cities Serv. Gas Co. v. Fed. Power Comm'n, 424 F.2d 411 (10th Cir. 1969). “613-3 (a), 26 C.F.R. 1.613-3(a), define gross income from the property, in the case of gas wells, as the price at which the gas is sold at or near the well, or if it is not so sold gross income from the property “shall be assumed to be equivalent to the representative market or…”
Cities Serv. Gas Co. v. Fed. Power Comm'n, 424 F.2d 411 (10th Cir. 1970).
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