# Terrell Co. v. Commissioner > United States Board of Tax Appeals · January 10, 1928 · 9 B.T.A. 1131 URL: https://www.frixlaw.com/law-library/cases/4605898 ## Case - **Full name:** TERRELL COMPANY, v. COMMISSIONER OF INTERNAL REVENUE - **Court:** United States Board of Tax Appeals - **Decided:** January 10, 1928 - **Citations:** 9 B.T.A. 1131; 1928 BTA LEXIS 4292 - **Precedential status:** Published - **Opinion:** Opinion - **Judges:** Phillips - **Cited by:** 0 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4605898 ## Opinion text TERRELL COMPANY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Terrell Co. v. Commissioner Docket Nos. 9681, 10384, 11831. United States Board of Tax Appeals 9 B.T.A. 1131 ; 1928 BTA LEXIS 4292 ; January 10, 1928 , Promulgated *4292 Net income received by a lessee from the operation of an oil well upon the allotted lands of a citizen of the Creek Tribe of Indians held to be taxable. V. C. Biggers, Esq., for the petitioner. J. W. Fisher, Esq., for the respondent. PHILLIPS *1131 The Commissioner determined deficiencies of $11,735.56, $6,587.96, and $3,087.73 in income and profits taxes for the calendar years 1918, 1919, and 1920, respectively. To the extent of $12,747.75, he rejected a claim for abatement of an additional assessment of $29,280.52 for 1917. Petitions were filed for a redetermination of the deficiencies so determined. FINDINGS OF FACT. The petitioner is an Oklahoma corporation with its principal office and place of business in Tulsa. Susanna Collins (sometimes designated Susana Collins) was a full blood citizen of the Creek Tribe of Indians and as a part of her distributive share of the lands of said tribe she was allotted the southeast quarter of section 8, township 18, range 11 east, situated in what is now Creek County, Oklahoma. On the 18th day of October, 1910, Lewis Collins, as guardian of the said Susanna Collins, made and executed *4293 an oil and gas mining lease upon the above described property, such lease being in the manner and form required by the Interior Department and the lessee being one S. D. Felt, of Tulsa, Okla. The said lease was duly approved by the First Assistant Secretary of the Interior on January 31, 1911, and was duly filed for the record of the Superintendent for the Five Civilized Tribes, at Muskogee, Okla. Said lease provided for the payment to the lessor of 12 1/2 per cent of the gross proceeds of all crude oil extracted from the lands. On the 16th day of September, 1913, S. D. Felt, by conveyance duly made, assigned said lease to the Terrell Company, the petitioner herein, said assignment being *1132 duly approved by an Assistant Secretary of the Interior on April 4, 1914. At the time of the execution of said lease and at all times thereafter up to and including the present time the land hereinbefore described was owned by the said Susanna Collins. The income upon which the tax in controversy is sought to be imposed by the Commissioner of Internal Revenue and which is involved in this appeal, is income received by the petitioner in the operation of said oil and gas lease upon *4294 the lands heretofore described, belonging to Susanna Collins. The production of oil received by the petitioner from the above described land, in the operation of said oil and gas lease herein described, was as follows: For the year 1917 64,201.74 barrels. For the year 1918 41,399.44 barrels. For the year 1919 30,426.96 barrels. For the year 1920 19,827.84 barrels. The above production represents the gross production produced from said lease. The petitioner received seven-eighths of said production and the said Susanna Collins one-eighth of same. The gross income received by the petitioner from the sale or inventory of the production of oil received by it as its seven-eighths share of same produced from said lands, was: For the year 1917 $100,885.23 For the year 1918 79,291.39 For the year 1919 60,871.27 For the year 1920 58,988.63 The said lease herein referred to is still producing oil and gas in paying quantities. Said Susanna Collins was living on the 20th day of January, 1927, and was under the direction and supervision of the Superintendent of the Five Civilized Tribes, with reference to this lease. If the taxpayer *4295 is subject to taxation for the income received from the operation of the oil and gas lease upon the lands of Susanna Collins, the amounts determined to be due by the Commissioner of Internal Revenue as contained in his respective deficiency letters are the correct amounts due. OPINION. PHILLIPS: This proceeding was presented upon a stipulation setting out certain agreed facts and documentary evidence in support thereof. Substantially the same question which is before us was presented to the Supreme Court in , and decided (on November 21, 1927) adversely to the position taken by petitioner. The only fact brought to our attention *1133 which might distinguish the present proceeding from the situation upon which the Supreme Court ruled is that in the present case the lands of the petitioner are expressly exempted from taxation, while the lands of the Osage Tribe of Indians are not. It was a lease from this latter tribe which the Supreme Court considered in the Colonial Trust Co. case. The members of that tribe could claim exemption from the income tax only upon the ground that the taxing statute *4296 should not be interpreted to include them. The lands of the Creek Tribe of Indians, however, are expressly exempted from taxation. Upon authority of ; , and other decisions, it is contended that if the source of the income is exempt, so are the income and revenues derived therefrom. The situation of the lessee in the instant proceeding, however, appears to be no different from that of the lessee in the case before the Supreme Court. We regard the opinion in that case as controlling the decision of the question raised in this proceeding. Reviewed by the Board. Decision will be entered for the respondent. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4605898. Public record. Not legal advice.