Rockford Brick & Tile Co. v. Commissioner

*314OPINION.

The taxpayer claims the right to increase its invested capital for the fiscal year ended January 31, 1920, in the amount of $34,099.77, that amount representing a reduction made in the surplus of the company in 1915 as a result of charging off certain balances in a “development” account and a “turnover” account.

We are satisfied from the evidence that the amount charged off to the surplus account in 1915 should be restored as of that. date. It appears, however, that the improvements acquired by the expenditure of $34,099.77 were subject to depreciation, which depreciation would not be taken into account in the computation of invested capital for the taxable year if the entire amount of $34,099.77 wore *315added to tlie invested capital determined for the fiscal year. The depreciated cost of the improvements represented by the $34,099.77 in question should be added to the invested capital for the taxable year under review in the redetermination of the correct amount of the deficiency. Appeal of Goodell-Pratt Co., 3 B. T. A. 30.

Order of redetermination will be entered on 15 days’ notice, under Rule 50.