Black Hardware Co. v. Commissioner of Internal Revenue

Fifth Circuit

Black Hardware Co. v. Commissioner of Internal Revenue

39 F.2d 460, 2 U.S. Tax Cas. (CCH) 498, 8 A.F.T.R. (P-H) 10536, 1930 U.S. App. LEXIS 4095

CourtCourt of Appeals for the Fifth Circuit

DecidedMarch 22, 1930

Docket5712

StatusPublished

Cited by12 cases

This text of 39 F.2d 460 (Black Hardware Co. v. Commissioner of Internal Revenue) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Black Hardware Co. v. Commissioner of Internal Revenue, 39 F.2d 460, 2 U.S. Tax Cas. (CCH) 498, 8 A.F.T.R. (P-H) 10536, 1930 U.S. App. LEXIS 4095 (5th Cir. 1930).

Pincite

Opinion

FOSTER, Circuit Judge.

In this case, the facts are not in dispute. Petitioner is engaged in the hardware business in Galveston, Tex., and owns a three story brick building. Galveston is periodically visited by storms of great violence and in 1919 a committee of business men, in conjunction, with United States engineers, recommended that the level of the entire city be raised to a height of approximately 12% feet above sea level. The plan was never put into effect but petitioner raised the lower floor of his building approximately 4% feet, which was sufficient to protect it against the highest flood tide. This cost petitioner $13,-252 for raising the floor and, in addition, $2,-916.06 for remodelling shelving, bins, etc. The expenditures were made in the fiscal year ending June 30, 1920. Petitioner sought to deduct these amounts from its gross income for the year 1920 as an ordinary and necessary business expense. This was'disallowed *461 by the Commissioner of Internal Revenue who determined a deficiency of $11,591 in taxable income. On appeal, the Board of Tax Appeals reached the conclusion that, while the improvements did not prolong the life of the building, nor increase its value as a building, it became more valuable for the use of petitioner in his business, as the improvements are a protection against damage from future storms. The Board held that the raising of the floor and subsequent rearrangement of the fixtures amounted to improvements and betterments, and should be added to the petitioner’s capital investment and not be deducted as business expenses for the taxable year.

We concur in the decision of the Board.

Affirmed.

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FOSTER, Circuit Judge.

In this case, the facts are not in dispute. Petitioner is engaged in the hardware business in Galveston, Tex., and owns a three story brick building. Galveston is periodically visited by storms of great violence and in 1919 a committee of business men, in conjunction, with United States engineers, recommended that the level of the entire city be raised to a height of approximately 12% feet above sea level. The plan was never put into effect but petitioner raised the lower floor of his building approximately 4% feet, which was sufficient to protect it against the highest flood tide. This cost petitioner $13,-252 for raising the floor and, in addition, $2,-916.06 for remodelling shelving, bins, etc. The expenditures were made in the fiscal year ending June 30, 1920. Petitioner sought to deduct these amounts from its gross income for the year 1920 as an ordinary and necessary business expense. This was'disallowed *461 by the Commissioner of Internal Revenue who determined a deficiency of $11,591 in taxable income. On appeal, the Board of Tax Appeals reached the conclusion that, while the improvements did not prolong the life of the building, nor increase its value as a building, it became more valuable for the use of petitioner in his business, as the improvements are a protection against damage from future storms. The Board held that the raising of the floor and subsequent rearrangement of the fixtures amounted to improvements and betterments, and should be added to the petitioner’s capital investment and not be deducted as business expenses for the taxable year.

We concur in the decision of the Board.

Affirmed.

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Bluebook (online)

39 F.2d 460, 2 U.S. Tax Cas. (CCH) 498, 8 A.F.T.R. (P-H) 10536, 1930 U.S. App. LEXIS 4095, Counsel Stack Legal Research, https://law.counselstack.com/opinion/black-hardware-co-v-commissioner-of-internal-revenue-ca5-1930.

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