Rev. Rul. 56-676

A life insurance company, filing its corporation income tax returns for the taxable years 1949 to 1953, inclusive, under the provisions of section 201 of the Internal Revenue Code of 1939, acquired certain land properties in the conduct of its investment activities and leased such land properties to oil and gas-producing companies. Income from the operation of these properties was received by the life insurance company in the form of royalties which were not reported in its income tax returns for any of the taxable years mentioned. Held, such royalties from oil and gas leases received by the life insurance company do not constitute `rents' within the meaning of section 201(c)(1) of the 1939 Code or its counterpart, section 803(a)(2) of the Internal Revenue Code of 1954 (prior to the amendment thereof by the Life Insurance Company Tax Act for 1955, 70 Stat. 36, approved March 13, 1956, C.B. 1956-1, 858, as further amended by the Act of July 24, 1956, Public Law 784, 84th Cong., 2d Session, 70 Stat. 633, page 1179 of this Bulletin.) See Campbell v. Great National Life Insurance Company , 219 Fed.(2d) 693; Pan-American Life Insurance Company v. Commissioner , 24 T.C. 901, acquiescence, page 7 of this Bulletin; and General American Life Insurance Company v. Commissioner , 25 T.C. 1265, acquiescence, page 5 of this Bulletin.