[288 U.S. 467, 468] Mr. Robert Ash, of Washington, D.C., for petitioner.
The Attorney General and Mr. G. A. Youngquist, Asst. Atty. Gen., for respondent.
Mr. Justice STONE delivered the opinion of the Court.
Petitioner, a Maine corporation, in making its tax returns of income derived from the operation of oil wells in the years 1925, 1926, and 1927, claimed a deduction from gross income of a depreciation allowance on account of the capitalized costs of drilling the oil wells. The Commissioner refused to allow the deductions and assessed a corresponding deficiency against the taxpayer. On appeal the Board of Tax Appeals held that the deductions should have been allowed. 23 B.T.A. 890. On petition for review the Court of Appeals for the Fourth Circuit reversed the order of the Board. 61 F.(2d) 273. The court held that the deductions claimed were included in the depletion allowance fixed by section 234(a)(8) of the Revenue Act of 1926, 26 USCA 986(a)(8), at 27 1/2 per cent. of petitioner's gross income for the years in question, and could not be allowed as depreciation of improvements. This Court granted certiorari ( 287 U.S. 592 , 53 S.Ct. 121, 77 L.Ed. --) to resolve a conflict of the decision below with that of the [288 U.S. 467, 469] Court of Claims in Dakota-Montana Oil Co. v. United States, 59 F.(2d) 853. For reasons stated in United States v. Dakota-Montana Oil Co., 288 U.S. 459 , 53 S.Ct. 435, decided this day, the Commissioner rightly refused to allow the deductions claimed and the judgment below is