Doerfler v. Commissioner

*921 SIEFKIN: This is a proceeding for the redetermination of a deficiency in income tax for the calendar year 1920 in the amount of $8,196.79, resulting from the determination by the respondent that the decedent, Charles J. Maurer, realized a profit on the sale of an ice plant in that year for $150,000.

On November 15, 1920, the decedent, Charles J. Maurer, the owner of land, buildings, machinery and equipment constituting an ice and cold storage plant in Springfield, Ill., sold the same for $150,000. In addition to land, buildings, machinery and equipment, there was included in the assets sold certain current assets in the net amount of $7,051.37. Part of the property was owned by the decedent on and before March 1, 1913, consisting of land, a storage house, an ice plant with a rated daily capacity of 60 tons a day, and certain machinery and equipment. The fair market value of the ice plant, storage plant, machinery and equipment on March 1, 1913, was $87,023.33, of which total amount $60,000 was the value of the ice plant, machinery and equipment, $4,560*3140 the value of the land, and $22,463.33 the value of the storage plant. Between March 1, 1913, and November 15, 1920, the decedent added the following land, buildings, machinery and equipment at the costs set opposite each item:

*922 Between March 1, 1913, and November 15, 1920, the decedent, Charles J. Maurer, deducted on his income-tax returns and was allowed depreciation on the frame building at the rate of 4 per cent per year, upon the brick building at the rate of 2 per cent per year, upon the heater at the rate of 25 per cent per year, upon the smoke stack at the rate of 25 per cent, upon the wagons at the rate of 20 per cent, upon*3141 the harness at the rate of 10 per cent, upon the frame shed and frame office at the rate of 3 per cent, upon horses and the auto trucks purchased in 1916 and 1917 at the rate of 20 per cent per year, upon the auto trucks purchased in 1918 and 1919 at the rate of 25 per cent per year. Depreciation at these rates upon the assets acquired after March 1, 1913, should be deducted from the cost of such assets, and there being no evidence from which we can segregate or separately value the assets going to make up the $60,000 value for the ice plant on March 1, 1913, the adjustment of $25,962.19 on account of depreciation to assets owned by the decedent March 1, 1913, as made by the respondent, is approved. The profit, if any, resulting from the sale in 1920, should be computed upon the above figures.

Judgment will be entered under Rule 50.