*241OPINION.
Marquette:The petitioner contends that he is entitled to allowance for depletion of his royalty interest in oil lands for the year 1923. He received his royalty interest by gift June 14, 1923.
Section 202 (a) (2) of the Revenue Act of 1921 provides:
That the basis for ascertaining the gain derived or loss sustained from a sale or other disposition of property, real, personal, or mixed, acquired after February 28, 1913, shall be the cost of such property; except that—
⅝ ⅝ sfc ⅛ sfc ⅜ ⅜
(2) In the case of such property acquired by gift after December 31, 1920, the basis shall be the same as that which it would have in the hands of the donor or the last preceding owner by whom it was not acquired by gift. * * *
The respondent contends that under the section just quoted any profit on the sale of the petitioner’s property here involved should be determined on the same basis as it would be if it was sold by the *242donor; that the petitioner must use for depletion the basis which the donor would use in computing gain or loss, and that since the donor was not entitled to any 1913 value or to any discovery value, then the petitioner, who was the donee, is on the same basis and is not entitled to depletion allowance.
This very question was before the Board and was decided in Magdaline McKinney et al., 16 B. T. A. 804. In discussing and determining the question, it was said:
* * * There are, however, other considerations which lead us to believe that the paragraph quoted does not control in the case of depletion claimed under the 1921 Act. The reports of the Congressional Committees (67th Cong., 1st sess., H. It. 350; S. 275) disclose that the paragraph in question was added for the purpose of subjecting gains to income tax and preventing evasion by means of gifts. The provision was designed to deal with a sale by the donee, and there is nothing to indicate that Congress intended that it should affect the basis for depletion deductions. The provisions of the Revenue Act of 1921 with respect to depletion are, so far as is here material, the same as are contained in the Revenue Act of 1918. Sec. 214 (a) (10). It provided that the allowance for depletion should be based upon cost, with the exceptions therein noted. Since the section fixes the basis on which depletion is to be allowed, there is no necessity of referring to other sections to fix the basis. * * *
We consider that decision controlling in the present proceeding and this petitioner is entitled to allowance for depletion for the year 1923 based upon the fair market value of his royalty interest on the date he acquired it, namely, June 14, 1923.
The respondent’s determination of a deficiency amounting to $32.49 for the year 1924 is sustained.
Reviewed by the Board.
Judgment will he entered under Bule 50.
Smith and Van Fossan dissent.