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an amount equal to any rents or royalties paid or incurred by the
taxpayer in respect of the property". Secs. 613(a), 613A(c)(1).
It has long been decided that the "gross income from the
property" is the gross income from the property received by the
taxpayer claiming the deduction for depletion. Helvering v.
Mountain Producers Corp., 303 U.S. 376, 382 (1938); Helvering v.
Twin Bell Oil Syndicate, 293 U.S. 312 (1934); McLean v.
Commissioner, 41 B.T.A. 565, 575 (1940), affd. 120 F.2d 942 (5th
Cir. 1941). Accordingly, for purposes of computing the amount of
average daily production to which the depletion allowance will
apply, section 613A(c)(2) provides that the average daily
production for a taxpayer with a partial interest is equal to the
total production of the property times the taxpayer's percentage
participation in the revenue from such property.
Applying the foregoing statutory provisions, it is clear
that, where more than one taxpayer is involved, the depletion
allowance for any one taxpayer cannot be calculated on the gross
income from the property as a whole, since the allowance must be
apportioned equitably in keeping with the respective interests of
lessor and lessee. Helvering v. Twin Bell Oil Syndicate, supra;
Callahan Mining Corp. v. Commissioner, 51 T.C. 1005, 1020 (1969),
affd. 428 F.2d 721 (2d Cir. 1970); cf. sec. 613A(c)(2). Thus,
petitioners' argument based on their title to the land is without
merit.
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