TAXATION-EXEMPTION OF SOVEREIGN INSTRUMENTALITY-EFFECT OF IMPOSING TAX

Authors

Abstract

Plaintiff corporation brought suit against the collector of internal revenue for federal income taxes paid under protest. The taxes were assessed upon the net income derived from the sale of oil and gas produced on lands which the plaintiff held under lease from the state of Texas. A legislative act provided for the leasing of the lands to further the development of their natural resources, the lessees paying a royalty on oil and gas. The statutory leases had been previously held to constitute a sale of the minerals. Theisen v. Robison, 117 Tex. 489, 8 S.W. (2d) 646. The statute had also provided that rights acquired under the act should be "subject to taxation as is other property." Laws Tex. 1917, c. 83, sec. 27. Plaintiff contended it was exempt from taxation as an instrumentality of the state. On appeal it was held that a sovereign state may subject interests in public lands which it has sold to taxation, and that the lessee was not exempt as a state instrumentality. Bass v. Group No. 1 Oil Corporation, 41 F.(2d) 483.

Recommended Citation

TAXATION-EXEMPTION OF SOVEREIGN INSTRUMENTALITY-EFFECT OF IMPOSING TAX, 29 Mich. L. Rev. 121 (1930).
Available at: https://repository.law.umich.edu/mlr/vol29/iss1/29