Appeal of Jewelers Building Co.

Board of Tax Appeals

Appeal of Jewelers Building Co.

2 B.T.A. 540

CourtUnited States Board of Tax Appeals

DecidedSeptember 8, 1925

DocketDocket No. 1533

StatusPublished

Cited by1 cases

This text of 2 B.T.A. 540 (Appeal of Jewelers Building Co.) is published on Counsel Stack Legal Research, covering United States Board of Tax Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Appeal of Jewelers Building Co., 2 B.T.A. 540 (bta 1925).

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Opinion

[541]*541OPINION.

Phillips:

In support of his contention that the lease to the taxpayer had a value on March 1,1913, taxpayer proved the net income received from the property in 1913 and for the five preceding years. There was nothing in the real estate situation in 1913 which would indicate that thé building would yield less return in the future than [542]*542in the past. The income for 1913 was much lower than was reasonably to be expected, as half of the ground floor was vacant during the greater part of that year, but because of the location of the building this was a condition which was not likely "to continue and these premises were, in fact, rented in September, 1913.

For the purposes of this appeal, it was stipulated between counsel that. 10 per cent was a reasonable return on a leasehold interest and that when the Board had found, if" it could find, what was on March 1, 1913, a reasonable aniiual return to be expected from this leasehold on March 1, 1913, that the value of the lease as of that date should be computed by the use of Hoskold’s formula.

In accordance with this stipulation of counsel, the March 1, 1913 value will be computed upon the basis of an anuual net income from the lease of $6,000 from March 1, 1913, to September 30, 1918, and of $4,000 from October 1, 1918, to September 30, 1928. In computing the deficiency the taxpayer will be allowed to deduct from his income twelve one-hundred-eighty-sevenths of the March 1, 1913, value of such lease as the amount of the exhaustion thereof suffered during 1921.

ArttNdell not participating.

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[541]*541OPINION.

Phillips:

In support of his contention that the lease to the taxpayer had a value on March 1,1913, taxpayer proved the net income received from the property in 1913 and for the five preceding years. There was nothing in the real estate situation in 1913 which would indicate that thé building would yield less return in the future than [542]*542in the past. The income for 1913 was much lower than was reasonably to be expected, as half of the ground floor was vacant during the greater part of that year, but because of the location of the building this was a condition which was not likely "to continue and these premises were, in fact, rented in September, 1913.

For the purposes of this appeal, it was stipulated between counsel that. 10 per cent was a reasonable return on a leasehold interest and that when the Board had found, if" it could find, what was on March 1, 1913, a reasonable aniiual return to be expected from this leasehold on March 1, 1913, that the value of the lease as of that date should be computed by the use of Hoskold’s formula.

In accordance with this stipulation of counsel, the March 1, 1913 value will be computed upon the basis of an anuual net income from the lease of $6,000 from March 1, 1913, to September 30, 1918, and of $4,000 from October 1, 1918, to September 30, 1928. In computing the deficiency the taxpayer will be allowed to deduct from his income twelve one-hundred-eighty-sevenths of the March 1, 1913, value of such lease as the amount of the exhaustion thereof suffered during 1921.

ArttNdell not participating.

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2 B.T.A. 540, Counsel Stack Legal Research, https://law.counselstack.com/opinion/appeal-of-jewelers-building-co-bta-1925.

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