Security Title Bldg., Inc. v. Commissioner

Security Title Building, Inc. v. Commissioner.

Security Title Bldg., Inc. v. Commissioner

Docket No. 5662.

United States Tax Court

1946 Tax Ct. Memo LEXIS 127; 5 T.C.M. (CCH) 636; T.C.M. (RIA) 46175;

July 25, 1946

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W. Joseph McFarland, Esq., and Maynard J. Toll, Esq., 900 Title Insurance Bldg., 433 S. Spring St., Los Angeles 13, Calif., for the petitioner. Byron M. Coon, Esq., for the respondent.

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VAN FOSSAN

Memorandum Opinion

VAN FOSSAN, Judge: The respondent determined deficiencies of $1,919.45 and $3,532.54 for the respective years 1941 and 1942. The petitioner puts these deficiencies in issue and claims an overpayment aggregating $6,292.65 for the two years.

The sole question presented to the Court is the proper period over which depreciation on a certain large store and office building located in Los Angeles, California, should be based, the petitioner contending for a useful life of 40 years from the erection of the building in 1927 and the respondent having fixed a total period of 65 years from said date and computed depreciation accordingly. The controversy concerns only the building proper and does not involve either fixed or moving mechanical equipment, such as elevators, etc.

All of the facts describing the building were stipulated, as were a tabular summary of operations and dividends paid from 1928 to 1942, a statement of actual rentals showing percentage of original 1927 rates obtaining in 1942, and composite profit and loss statements covering the life of the building from 1928 to 1942. The evidence adduced at the hearing consisted of the testimony of expert witnesses produced by either party, together with certain supplementary exhibits. The stipulated facts and the data appearing on the exhibits are incorporated herein by reference and adopted as the facts of the case.

On the basis of all the facts of record and according to the opinions of the several witnesses due weight, and making allowance for all the factors and data in our judgment properly to be taken into consideration in fixing the period of useful life of the building in question, we find the total useful life of the building known as the Security Title Building to be 50 years from its construction and a proper depreciation rate to be 2 per cent per annum.

Decision will be entered under Rule 50.