North American Reassurance Co. v. Commissioner ( 1934 )

NORTH AMERICAN REASSURANCE COMPANY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

North American Reassurance Co. v. Commissioner

Docket Nos. 52674, 60678.

United States Board of Tax Appeals

31 B.T.A. 92; 1934 BTA LEXIS 1165;

August 14, 1934, Promulgated

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1. DEDUCTIONS - DEPRECIATION. - Petitioner held not to be entitled to a reasonable allowance for depreciation upon furniture and fixtures used in the underwriting department of its business. Rockford Life Ins. Co. v. Commissioner,292 U.S. 382">292 U.S. 382, followed.

2. Id. - RESERVES. - The valuation or "separate liability" required by section 85 of the insurance statute of the State of New Yorkheld not to be a reserve required by law within contemplation of section 245(a)(2) of the Revenue Act of 1926 and section 203(a)(2) of the Revenue Act of 1928 and consequently not includable by petitioner in the total reserve upon which its deduction is computed under those sections.

William H. Hotchkiss, Esq., for the petitioner.

I. Graff, Esq., for the respondent.

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LEECH

OPINION.

LEECH: On January 5, 1934, the Board promulgated its opinion in these consolidated proceedings, reported at , but the final decision has not been entered, due to the granting of a motion to withhold its entry pending the decision of the Supreme Court in the case of .

Respondent has now filed a motion for reconsideration and revision of the Board's opinion with respect to its holding that petitioner was entitled to a deduction for depreciation upon furniture and fixtures used in the underwriting, as well as the investment department, of its business. The hearing in the proceeding occurred January 16, 1933. On August 18, 1932, upon motion granted by this Board, respondent filed an amended answer herein, praying a specific increase in the deficiencies. Cf. . Respondent now also moves that the Board grant that prayer. Such motion is well founded and, therefore, is hereby granted.

Under the cited decision of the Supreme Court in , petitioner herein is not entitled to a deduction for depreciation on its furniture and fixtures used in the underwriting department of its business. Accordingly, our opinion heretofore promulgated is now modified to so hold.

The stipulation of facts in these proceedings, set out in our prior opinion, discloses that in determining the deficiencies in controversy, the respondent allowed for the years 1926 to 1928, inclusive, depreciation at the rate of 10 percent on the stipulated cost of all furniture and fixtures used in the business, and, further, that for the year 1929, respondent allowed depreciation at the rate of 10 percent on the cost of furniture and fixtures used only in the investment department. The cost of the furniture and fixtures used only in the investment department for each of the years in controversy is stipulated. We now conclude that, in determining the deficiencies for the years 1926 to 1928, inclusive, respondent erred in allowing depreciation on furniture and fixtures used in petitioner's underwriting department, and that his prayer for an increase in the deficiencies for those years should be granted. Our prior opinion is, therefore, further modified to so hold.

Decision will be entered under Rule 50.