
    M. W. Brellahan, Petitioner, v. Commissioner of Internal Revenue, Respondent. Helen Perkins, Petitioner, v. Commissioner of Internal Revenue, Respondent. P. M. Perkins, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket Nos. 14579, 14580, 15500, 15501.
    Promulgated April 11, 1928.
    
      T. W. Holloman, Esq., for the petitioners.
    
      A. S. Lisenby, Esq., for the respondent.
   OPINION.

Trammell:

Since the respondent conceded at the hearing the contention of the petitioner, Brellahan, that he was entitled to a deduction for 1921, in the amount of $1,871.93, as ordinary and necessary expenses, there is only one question for determination, and that is whether the petitioners are entitled to depletion deductions for the years involved based upon discovery value of the gravel pit.

It was claimed by the petitioner that discovery was made of gravel in the hill designated as hill B in June, 1920, after the third cut had been made through the hill with a steam shovel. Evidence was introduced as to the value of the leasehold as of that date.

There was testimony to the effect that operations were begun on hill B in May, 1920. On the other hand, there is testimony that in April, 1920, when the company was not operating any other pit, it paid to the lessor larger royalties than for any other -month during 1920. We áre convinced that hill B was actually being operated in April, 1920 and that the discovery of gravel on that hill was made prior to that time. The petitioners claimed that it could not be determined with any degree of accuracy what the quantity of the gravel was until they had gone to the bottom of the deposit which they did not do until June 10, 1920. It is upon this principle that the petitioners claimed discovery value as of June 10, 1920. We are of the opinion that the discovery was made at least more than thirty days prior to June 10,1920, and the value of the leasehold as it existed on June 10, 1920, which is more than thirty days after the discovery of the gravel, can not be used as a basis for depletion.

On the facts in this case the petitioners are not entitled to discovery value as of June 10, 1920, even if the statute, in any event, provided for depletion based on discovery value of a gravel pit or mine, and it therefore becomes unnecessary for us to decide whether, in any case, discovery value may be used as a basis for depletion of gravel. It also becomes unnecessary for us to discuss the evidence as to the valuation of the gravel deposit on June 10, 1920, or within thirty days thereafter.

Judgment will be entered on 15 days’ notice, under Rule 50.  