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United States v. Skelly Oil Co

Brief Fact Summary. Respondent was in the natural gas business in Oklahoma. After a change in the minimum price order on natural gas, Respondent had to refund a large amount of money to customers previously claimed as gross income.

Synopsis of Rule of Law. If a taxpayer was not entitled to keep money, he is entitled to a deduction in the year it is refunded.

Points of Law - Legal Principles in this Case for Law Students.

But where the benefit claimed by the taxpayer is fairly within the statutory language and the construction sought is in harmony with the statute as an organic whole, the benefits will not be withheld from the taxpayer though they represent an unexpected windfall.

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Facts. In 1958 Respondent refunded $505,536 to two of its customers for overcharges during the past six years. Respondent was a producer of natural gas in Oklahoma and had set its prices in accordance with a minimum price order of the Oklahoma Corporation Commission. When the order was vacated, Respondent settled a number of claims filed by its customers including the two at issue. The amount of the refund was included in Respondent’s gross income, but Respondent was allowed a percentage depletion of 27

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