The opinion
*1068 OPINION.
Trammell:
With respect to the amount paid out by the taxpayer as reporter’s fees in reporting and transcribing the record in the *1069 suit brought by the United States to restrain, it from taking oil from its oil wells and to account for the oil taken, we are of the opinion that such amount was a capital expenditure.
The redrilling and deepening of the oil well in order to put it on a commercial basis is not an ordinary and necessary expense but is a capital expenditure which may be returned to the taxpayer through deductions allowed on account of exhaustion, wear and tear of the physical property involved or through the depletion allowance as the oil is extracted from the ground. The well was not upon a commercial basis when the taxpayer undertook to redrill and deepen it and it is immaterial that the well was redrilled and deepened to put it on a commercial basis instead of being drilled to completion in the first place.
With respect to the question as to whether 'the taxpayer should have been permitted to take a deduction on account of the exhaustion, wear and tear of its oil wells as separate and distinct from its physical property in connection therewith, the Board has no evidence upon which it can base a finding or reach the conclusion that the determination of the Commissioner was not correct. If it be conceded that the oil wells themselves depreciate and become exhausted in proportion as the oil is extracted from the land, or upon any other basis, we have no evidence as to the approximate life of the oil wells. The record does not disclose whether the Commissioner allowed the taxpayer a deduction on account of the exhaustion of its oil wells in connection with the depletion allowance, or whether the cost of drilling the wells entered into the cost of the oil extracted and was included in depletion allowances. We are unable to find from the record, therefore, that the determination of the Commissioner disallowing a claim for exhaustion of the oil wells was not correct.