Henton v. Commissioner

*21 This proceeding results from the determination by respondent of a deficiency in income tax for the calendar year 1920, in the sum of $757.44. Three errors are assigned: (1) The failure of respondent to allow as a deduction a loss sustained on the stock of the Automatic Bookkeeping Co.; (2) failure of respondent to allow as a deduction a loss sustained in the amount of $1,000, on the stock of the Cinnebar Company and a loss of $1,000 represented by a note endorsed by petitioner for the Cinnebar Company, which petitioner was forced to pay; (3) the net income received by petitioner from the operation of an oil well upon the restricted lands of a citizen of the Cherokee Tribe of Indians does not constitute taxable income.

At the hearing of this cause, petitioner waived error (1), and respondent confessed error relative to error (2).

FINDINGS OF FACT.

*4218 Sally E. Hicks was a citizen of the Cherokee Nation, and executed an oil and gas mining lease in favor of Arthur E. Paulger, covering certain lands situate in the State of Oklahoma, which lease bears an endorsement of two subsequent assignments, finally vesting an undivided one-fourth interest in the lease in favor of petitioner. All of the assignments of the lease were approved by the Secretary of the Interior. Sally E. Hicks was a full-blooded Cherokee, restricted and the restrictions against alienation of her lands have not been removed by the Secretary of the Interior.

During the year 1920, the net income received by petitioner on account of the oil and gas lease of which he was the lessee, amounted to $1,396.64.

OPINION.

MILLIKEN: The parties having filed a stipulation relative to errors (1) and (2), there is left for consideration only the question of the taxability of the net income received as a lessee in the year 1920 from the oil and gas lease here in question. In , we considered the same question and upon authority of the decision of the United States Supreme Court in the *22 case of *4219 , we held the net income received to be taxable.

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