COMMISSIONER OF INTERNAL REVENUE, PETITIONER,
v.
QUARTZITE STONE COMPANY, RESPONDENT
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The court held that the taxpayer's mineral deposit should be classified as quartzite for federal tax purposes, entitling it to a 15 percent depletion allowance.
The Commissioner of Internal Revenue challenged the Tax Court's determination that Quartzite Stone Company was entitled to a 15 percent depletion allo…
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LEWIS, Circuit Judge,
The Commissioner of Internal Revenue petitions for review of a decision of the Tax Court wherein the Quartzite Stone Company, a Kansas corporation, was held entitled to deplete the natural deposits quarried by the company at the rate of 15 per cent for federal tax purposes during the years 1951, 1952, and 1953. The single issue presented is whether the tax court correctly determined that taxpayer’s mineral deposit was quartzite within the meaning of Section 114 (b) (4) (A) (iii), the Internal Revenue Code of 1939 (26 U.S.C., 1952 Ed. § 114) thereby rejecting the Commission’s contention that the deposit was subject to but 5 per cent depletion allowance as stone under Sec. 114(b) (4) (A) (i). The cited statute provides:
Ҥ 114. Basis for depreciation ans deposit is ad. mittedly not.
However, had Congress intended to limit quartzite by quality a more restricted term would have been used in describing the mineral as was done in listing clay and limestone, i. e. “refractory clay,” “metallurgical grade limestone,” “chemical grade limestone.” And certain it is that quartzite should not be limited to that quality of stone suitable ^or a Particular use. United States v. Wagner Quarries Company, 6 Cir., 260 F. 2d 907; Spencer Quarries, Inc. v. Commissioner of Internal Revenue, 27 T.C. 392
We believe it to have been the intent of Congress to have used the term quartzite in an unrestricted sense and to have set a 15 per cent depletion allowanee whenever the mineral was accepted commercially as quartzite. Taxpayer’s deposit has been so accepted by the construction industry. For a great num ber of years the taxpayer has marketed the deposit as quartzite. Large buyers such as the Union Pacific Railroad have ordered the mineral as “quartzite” and accepted the product as such. The Kansas Geological Survey Bulletin (an official publication) has described taxpayer’s deposit as quartzite suitable for use in the construction industry. Under such circumstances we hold that the Tax Court properly determined that the mineral should be classified as quartzite for tax purposes and the judgment is accordingly affirmed.
. Stone of such quality was considered by the Tax Court in Spencer Quarries, Inc. v. Commissioner of Internal Revenue, 27 T.C. 392.
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Riddell v. Victorville Lime Rock Co., 292 F.2d 427 (9th Cir. 1961)
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Standard Realization Co. v. United States, 289 F.2d 247 (7th Cir. 1961)
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United States v. W. R. Bonsal Co., 279 F.2d 465 (4th Cir. 1960)
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Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- United States v. The Wagner Quarries Co., 260 F.2d 907 (6th Cir. 1958)