Roger Muldavin, et al. - Page 8

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          contention is that we are without jurisdiction to consider their            
               We now turn to an analysis of the issue as to whether                  
          petitioners are entitled to a depletion allowance in excess of 15           
          percent of their gross royalty income.                                      
               As we see it, there are two prongs to petitioners' position.           
          First, they contend that, as owners of the land, they are                   
          entitled to the entire percentage depletion allowance given that            
          Shell as an integrated oil producer is not entitled to such an              
          allowance.  Second, they contend that their percentage depletion            
          allowance should be calculated on the basis of the "market                  
          price"4 as provided in section 1.613-3(a), Income Tax Regs.  For            
          reasons hereinafter set forth, we reject both contentions.                  
               Section 611(a) provides for a reasonable allowance for                 
          depletion in the case of oil wells.  Section 611(b) provides that           
          "In the case of a lease, the deduction under this section shall             
          be equitably apportioned between the lessor and lessee."   With             
          exceptions not applicable to petitioners, the depletion allowance           
          for oil wells is, with respect to a limited quantity of the                 
          taxpayer's average daily production of oil, 15 percent "of the              
          gross income from the property excluding from such gross income             

          4  Petitioners set forth in their briefs extensive data                     
          related to this calculation.  Such data, however, is not evidence           
          and, therefore, in any event would not be considered.  Rule                 
          143(b); see also supra pp.6-7.                                              

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