*285OPINION.
Kern :1. The first issue here is whether or not respondent erred in disallowing a deduction of $22,866.13 claimed by petitioner in its return for the taxable year. This amount represented the balance of an open account due petitioner from the Western Paving Co., which petitioner formally determined to be worthless and charged off in 193C. Neither the amount of the indebtedness nor the fact that it was charged off is questioned by respondent. Eespondent contends that the facts at the close of the taxable year, as disclosed by the evidence, did not justify a determination that the account was then worthless.
We agree with the respondent’s contention. We have set out in our findings all of the evidence material to this issue. It is apparent that this evidence was almost entirely composed of opinions and conclusions. Neither the balance sheet of Western nor of Harden was introduced in evidence. In view of respondent’s determination the burden was upon petitioner to present to us facts upon which we would be able to form an independent opinion as to the worthlessness of the debt in question. Higginbotham-Bailey-Logan, Co., 8 B. T. A. 566; M. Rea Gano, 19 B. T. A. 518. This it has not done.
Respondent's action on the first issue is affirmed.
2. The second issue is whether or not respondent erred in denying an expense deduction claimed by petitioner for legal costs paid in the taxable year in defending its right to receive certain oil and gas royalties. In 1930 petitioner had acquired for a- cash consideration the lessor’s retained one-eighth royalty interest in the proceeds from the sale of oil and gas from certain lands, and also the lessor’s additional overriding royalty of one-fourth of the remaining seven-eighths, under a working or development contract. In 1932 two suits were instituted in a District Court of Oklahoma against petitioner and others, in which the plaintiffs attacked the lessor’s title to the land and claimed 17 percent of the oil and gas produced and to be produced from the leaseholds. During the pendency, of the suits 17 percent of petitioner’s royalties were impounded, amounting to $37,950.60.
We think that the case is ruled by our recent decision in Morgan Jones Estate, 43 B. T. A. 691, where we declined to follow Bliss v. Commissioner, 57 Fed. (2d) 984, which is petitioner’s principal reliance here.. We see no facts here which would take it out of the rule there laid down. It is true that petitioner had no fee title to the lands, but only an assignment from the fee owner and lessor to the oil company of its reserved one-eighth royalty and overriding one-fourth royalty *286in the remaining seven-eighths oil interest; but we do not think it material to determine whether such an interest constituted in itself an interest in land. The material facts are that petitioner’s right, whether petitioner is regarded as the holder of a lease or of a profit á prendre, was derivative from its lessor, and the suits in question attacked the lessor’s title, and, consequently, the petitioner’s right. Petitioner was defending an attack on what in any common sense acceptance of the term was a property interest and the expense incurred was, therefore, a capital expenditure and not an ordinary expense incurred in carrying on petitioner’s business.
Respondent is sustained on the second issue.
A short answer can be given to petitioner’s alternative contention that, if the impounded funds released to it in 1985 ($87,950.60) are in-cludable in its gross income for that year, as it returned them, they are not properly includable in excess of $27,146.60, since its legal expenditures in protecting them in that year came to $10,804. The fallacy of this argument lies in the fact that it was not merely the gross income for 1935 which was saved to petitioner by its litigation, but its entire right, which, like any other asset of value, was income-producing over several years. To capitalize the cost of that right’s protection is, therefore, the only logical way to deal with it.
3. In its pleadings petitioner alleges that the statute imposing the excess profits tax (sec. 702, Revenue Act of 1934) is unconstitutional, and that the tax paid in the amount of $1,871.33 should, therefore, be refunded. In view of the decisions cited below, petitioner, while not waiving the point, declined to argue it on brief. Petitioner’s contention is denied. The constitutionality of this statute has been sustained in Chicago Telephone Co. v. United States (Ct. Cls.), 23 Fed. Supp. 471; certiorari denied, 305 U. S. 628; Patrick McGovern, Inc., 40 B. T. A. 706. Cf. Haggar Co., 38 B. T. A. 141, 143; W. & K. Holding Corporation, 38 B. T. A. 830.
Reviewed by the Board.
Decision will be entered winder Hule '50.
ArtjNdell dissents on the first point.