
    C. W. Carey, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 2432.
    Promulgated March 16, 1927.
    1. Expenditures made on an oil well which proved worthless and was abandoned, are deductible as a loss in the year in which the well was abandoned.
    2. Deduction of pro rata share of expenses of operating oil wells allowed as business expense.
    3. Expenses of operation and depreciation of an automobile used to transport petitioner between his residence and oil field where his business was, and in transporting him over the field to look after his several wells, were deductible as business expenses.
    4. Evidence helé insufficient to show Commissioner’s determination of depreciation was incorrect.
    
      Don T. Haynes, Esq., for the petitioner.
    
      Robert A. Littleton, Esq., for the respondent.
    This is a proceeding to redetermine a deficiency in income tax for the year 1919, amounting to $2,034.20. The petitioner alleges, in substance, that the respondent erred in:
    (1) Disallowing a loss of $5,330.14 sustained by petitioner in the Seven Oil Co.
    (2) Disallowing a deduction of $4,830.25, expenses borne by petitioner in connection with the Crowe! 1-Willis Co.
    (3) Disallowing a loss of $2,050 in connection with Carey Bros. Oil Co.
    (4) Disallowing a deduction of $1,000 as expense of operation and depreciation of an automobile used in business.
    (5) Reducing allowance for depreciation from $1,176, as claimed in petitioner’s tax return, to $175.80.
    (6) Rot allowing a loss of $2,332.49 in the Carey-Willis Drilling Co. to conform to a revenue agent’s report on that company.
    At the beginning of the hearing, the petitioner withdrew the third assignment of error, and reduced the amount of deduction claimed under the second assignment from $4,830.25 to $2,652.
    Ro evidence was introduced relative to the sixth alleged error.
    FINDINGS OF FACT.
    The petitioner resides in Wichita Falls, Tex.
    In 1919 he was in the business of developing oil properties and was engaged in several such enterprises together with other persons.
    A group of seven individuals associated under the name of “ Seven Oil Company ” acquired an oil lease. One of them was E. S. Carey, a brother of petitioner, who had a one-seventh interest. E. S. Carey assigned to petitioner one-half of his interest. The group drilled a well which turned out to be a dry hole and then abandoned the enterprise in 1919. The total amount expended for the purchase and development of the property was $70,000.
    The Crowell-Willis Co. was the name under which the petitioner and three other individuals engaged in an oil development enterprise. The petitioner had a one-eighth interest. They drilled wells and were producing oil. Each individual received his pro rata share of the proceeds of the operations and paid his proportionate part of the operating expenses. The petitioner paid in the taxable year, as his share of such expenses, $2,652.
    In September, 1918, the petitioner bought a Buick 6-E-45 automobile for which, including equipment, he paid $1,652.70. He used this automobile in 1919 for traveling from his home in Wichita Falls to oil fields where he was operating, about fourteen miles away, and in going from one well to another. During this year he expended $498.64 for maintaining and operating the automobile, and he claims a total deduction of $1,000 for such expenditures and depreciation of the automobile. The roads from his home office to the oil fields, as well as roads in that field, were in bad condition, and resulted in hard service on the automobile, and under those conditions the useful life of a car was three years.
    The petitioner,'in his income-tax return, deducted $1,176 for depreciation of the equipment used in the several enterprises in which he was engaged. This amount was reduced by the Commissioner to $175.80. ^ The Crowell-Willis Co. had four producing plants, each consisting of pumping equipment, tanks and other essential parts, the cost of each plant being about $10,000, which plants were depreciable property.
   OPINION.

Love:

(1) The petitioner claims to have sustained a loss of $5,380.14 on the Seven Oil Co. venture. He acquired one-half of his brother’s one-seventh interest and claims that $70,000 was spent in the enterprise for both the lease and the development work, but the amount expended by each does not appear in the record. As the petitioner owned a one-fourteenth interest, his part of that expenditure was $5,000, which was a loss to him, and as the enterprise was abandoned in 1919, it constituted a deductible loss in that year.

(2) The petitioner is entitled to deduct $2,652 as his share of the operating expense of the Crowell-Willis Co.

(3) Petitioner’s automobile was used by him primarily and principally in his oil and gas business, in transporting him from Wichita Falls to the oil fields and over the field to the several wells which his company was operating, and such traveling was a necessary incident to his business. Hence he is entitled to deduct depreciation and the amounts paid for operating the car as ordinary and necessary expenses. He spent $498.64 in maintaining the car and claimed $501.36 as depreciation, which amount is reasonable and should be deducted from gross income.

(4) There is not sufficient evidence to enable us to find the amount of depreciation on the oil well equipment, and we therefore can not disturb the respondent’s determination in respect to that item.

Judgment will he entered on 15 days' notice, under Rule 50.  