Kasper v. Commissioner

7 B.T.A. 1081, 1927 BTA LEXIS 3031

• Court: United States Board of Tax Appeals
• Decided: August 12, 1927
• Docket: Docket Nos. 7857-7861.
• Status: Published

Opinion

OPINION.

AkuNdbll :

We have repeatedly reí used to affirm any theoretical method of computing depreciation. Appeal of Kinsman Transit Co., 1 B. T. A. 552; Otis Steel Co. v. Commissioner, 6 B. T. A. 358. In the latter case we said that depreciation “ must be determined from the facts of each particular case.” The facts in the present case show that some of the partnership’s furniture upon which it claims a depreciation of 50 per cent for the year in which purchased was not rented during that year; some of it has never been rented although in the possession of the partnership for several years. It can not be said, in the face of such facts, that all of the furniture depreciated to the extent claimed by the petitioners. Moreover, the petitioners have failed to establish that the first rental of furniture depreciated it to the extent claimed for the purpose for which it was used. One of the partners testified that upon the sale of furniture and delivery of it to the home of the purchaser, “ it immediately becomes secondhand furniture and the value is immediately reduced from 50 to 75 per cent.” Another partner testified that the first rental of furniture to a studio depreciates its sales value at least 50 or 75 per cent. These estimates, it will be noted, refer to depreciation in sales value of furniture as a result of its sale or rental. The partnership was not engaged in selling furniture and care was taken to impress that, fact upon us. Its business was that of renting its furniture and other equipment.

The recent case of United States v. Ludey, 274 U. S. 295, holds that “ the amount of the allowance for depreciation is the same which should be set aside for the taxable year, in order that, at the end of the useful life of the plant in the business the aggregate of the sums set aside will (with the salvage value) suffice to provide an amount equal to the original cost.” The amounts to be deducted from income for depreciation thus depend upon the period of the useful life of the depreciable assets. The record does not show that the partnership’s merchandise suffered depreciation for the purpose used through its first rental beyond the 14 per cent allowed by the respondent. We must, therefore, affirm the respondent’s determination in all the appeals.

Judgment will be entered for the respondent,

Considered by Steenhagen and GeeeN.