Rev. Rul. 55-194

In G.C.M. 22730, C.B. 1941-1, 214, and G.C.M. 24849, C.B. 1946-1, 66, it is established that payments collected on in-oil payment rights, which payment rights are carved out of larger depletable interests in oil and gas in place, do not ordinarily qualify as royalty income.

In view of the foregoing, it is held that, for the purpose of determining personal holding company income, oil production payments collected on in-oil payment rights which were not originally granted or reserved in a leasing transaction do not qualify as mineral, oil, or gas royalties within the meaning of section 502(h) of the Internal Revenue Code of 1939