The plaintiff was hired by an oil and gas company as a “landman” to secure properties for oil and gas leasing. He had an “employee incentive agreement” with his employer that would pay him bonuses equal to a percentage of the net income from oil and gas properties that the employer acquired through the plaintiff’s efforts. For the tax years in issue, the plaintiff initially treated such payments as ordinary income, but then filed amended returns treating as capital gain the income from the sale of properties that the employer purchased via the plaintiff’s efforts, and also claiming a depletion deduction associated with the income from the proceeds of producing properties. The IRS disallowed capital gain treatment and disallowed a depletion deduction for the tax years at issue. The plaintiff paid the additional tax of over $500,000 and sued for a refund. The court upheld the IRS position noting that a depletion deduction is only available to an owner of an “economic interest” in the mineral deposits. The court noted that the plaintiff had not acquired an interest in the minerals through a capital investment and that, therefore, the plaintiff’s return on investment was not realized solely from mineral extraction. The plaintiff’s argument that his time, skill and experience in locating properties for his employer constituted a capital investment providing him with an economic interest in the minerals was rejected as a matter of law. The court noted that the plaintiff’s compensation agreement with his employer did not separately pay him for his “landman” duties, but that his regular job duties would include work as a “landman” and that the bonus payments were to incentivize his good work and continued employment. In addition, the agreement also specified that bonus payments were also tied to sales of the properties that the plaintiff helped the employer acquire. The plaintiff also failed to establish that he had acquired a “net profits interest” in any minerals, and whether such an interest would constitute an economic interest in the minerals. The court granted the government’s motion for summary judgment. Gaudreau v. United States, No. 13-1180-JWL, 2014 U.S. Dist. LEXIS 177522 (D. Kan. Dec. 29, 2014).