Lobsenz v. Commissioner , 17 B.T.A. 81 ( 1929 )

JESSE LOBSENZ, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Lobsenz v. Commissioner

Docket No. 29788.

United States Board of Tax Appeals

17 B.T.A. 81; 1929 BTA LEXIS 2358;

August 6, 1929, Promulgated

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1. Amount of gain on sale of real estate determined.

2. Deductions claimed allowed in part and disallowed in part.

3. Basis for computing depreciation determined.

William Surosky, C.P.A., for the petitioner.

Hartford Allen, Esq., for the respondent.

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ARUNDELL

Proceeding for the redetermination of deficiencies in income tax for the years 1923 and 1924, in the respective amounts of $1,428.91 and $862.91. Petitioner alleges that respondent erred (a) in fixing the cost of real estate sold in 1923; (b) in his determination of the depreciation basis and rate on certain buildings for 1923 and 1924; (c) in disallowing contributions in 1923; and (d) in disallowing "other deductions" in both years.

FINDINGS OF FACT.

Prior to 1923, but subsequent to March 1, 1913, petitioner and his then partner acquired 16 lots on Howe Avenue, Passaic, N.J., at a cost of $9,600. Subsequent assessments against said lots for street improvements amounted to $1,609.78. About 1921 petitioner purchased his partner's interest in the lots at a profit to the latter of $2,000, making the total cost of the lots to petitioner $13,209.78. He sold the lots in 1923 for $14,125, on which he paid a 5 per cent commission of $706.25, leaving a net sales price of $13,418.75 and a net profit to petitioner of $209.97.

In 1916 petitioner acquired property known as 684-686 Main Avenue, Passaic, N.J., at a cost of at least $90,000. The brick building on the property was improved in 1918 at a cost of at least $75,000. Of this total cost of $165,000 the amount of $115,000 is properly allocable to the cost of the building.

In 1920 or 1921 petitioner purchased a lot at 688 Main Avenue, improved by a brick building, for $75,000 of which $60,000 is allocable to the cost of the building.

About 1920 petitioner purchased premises at 411 Broadway, Paterson, N.J., for $25,000. The improvements consisted of an old frame and brick dwelling having 23 rooms. Of the cost of this property, $19,000 represents the cost of the building.

In 1910 or 1911 petitioner purchased for about $25,000 a lot at 104 Lexington Avenue, Passaic, N.J., improved with three frame dwellings.

In 1923 petitioner contributed $150 to a synagogue of which he was a member and $200 to an Old Folks Home Association.

In 1923 petitioner expended for water rent the sum of $108.12 and in 1924 the sum of $104.68. In each of the years 1923 and 1924 petitioner spent $300 for janitor hire for business properties.

OPINION.

ARUNDELL: In our findings of fact we have determined, (a) the amount of profit realized by petitioner on the sale of the Howe Avenue lots, (b) the basis for computing depreciation on buildings at 684-686, 688 Main Avenue, Passaic, N.J., and 411 Broadway, Paterson, N.J., (c) the amount deductible on account of contributions in 1923, and (d) the amounts paid in 1923 and 1924 for water rent and janitor service which are deductible as ordinary and necessary expenses. Recomputation of the deficiencies determined should be made accordingly.

There is no evidence as to the cost of the Lexington Avenue buildings and we are unable to say what is the proper basis for depreciation. While the pleadings raise issues as to both the depreciation rate and basis, no evidence was offered as to the rate, and, accordingly, the rates used by the respondent, 2 per cent on brick and 3 per cent on frame buildings, must be approved.

On the other claims made by petitioner, the evidence is too indefinite to warrant our making any findings of fact. A contention in petitioner's brief as to gross income from rents can not be considered as it is not an issue in the proceeding. The only issue raised by the pleadings as to rent is whether the respondent allowed sufficient depreciation in determining the income from rents.

Judgment will be entered under Rule 50.