William O. Douglas

“ And Treasury Regulations 77, Art. 221 (h) promulgated under the 1932 Act [2] defined 'net income * * * from the property' as used in § 114 (b) (3) so as to require 'development costs' of the kind here involved to be deducted from 'gross income from the property'. [3] The Board of Tax Appeals held that petitioner need not deduct these development expenditures in applying the 50 per cent limitation on depletion allowance (36 B.T.A. 1327) and the Circuit Court of Appeals reversed (5 Cir., 102 F.2d 596) . ”

“ Since we have this day decided in Helvering v. Wilshire Oil Co., Inc., supra, that comparable regulations under the 1928 Act were lawful, a fortiori those here involved are valid and binding on petitioner. ”