TietjeNS, Judge:
The Commissioner determined the following income tax deficiencies in these consolidated cases:
Taxable Docket year Deficiency Petitioners No. ended
W. K. Co. and its wholly owned Subsidiary — Public Taxi Service, Ine_ 4668-69 Courteous Cab Co.-.. 4669-69 Courteous Cab Co., successor by merger to Gemini Cab Co_.— 4660-69 Courteous Cab Co., successor by merger to Four Star Cab Co. 4661-69 Courteous Cab Co., successor by merger to Venus Cab Corp. 4662-69 Courteous Cab Co., successor by mergor to Jupiter Cab Corp. 4663-69 Courteous Cab Co., successor by merger to Leo Cab Co.. 4664-69 [9/30/64 19/30/66 (9/30/66 6/30/66 [7/31/64 17/31/65 (7/31/66 [6/30/64 16/30/65 (6/30/66 |9/30/64 l9/30/65 (9/30/66 7/31/64 (7/31/66 (7/31/66 [9/30/64 (9/30/65 (9/30/66 $3,726.31 10,683.22 24,494.52 1,983.84 142.19 893.73 1,501.92 18.41 103.33 100.96 457.77 592.23 586.00 166.98 659.79 152.00 95.50 471.94 1,174.08
The sole issue presented for our resolution is whether petitioners are entitled to amortize certain taxicab licenses or whether such licenses cannot be amortized because they have indeterminate useful, lives.
FINDINGS OF FACT
Some of the facts have been stipulated. The stipulation and exhibits attached thereto are incorporated herein by this reference.
Petitioners, W. K. Co. and its wholly owned subsidiary, Public Taxi Service, Inc., are corporations organized and doing business under the laws of the State of Illinois and at the time they filed their petition herein their principal office was located at Chicago, Ill. Both corporations filed consolidated corporate income tax returns (Form 1120) for the taxable years ended September 30, 1964, September 30, 1965, and September 30, 1966, with the district director of internal revenue at Chicago, Ill.
Petitioner, Courteous Cab Co., is a corporation organized and doing business under the laws of the State of Illinois and at the time it filed its petition herein its principal office was located at Chicago, Ill. Its corporate income tax return (Form 1120) for the taxable year ended June 30, 1966, was filed with the district director of internal revenue at Chicago, I'll.
Courteous Cab Co. is also the successor by merger dated January 13, 1969, to Gemini Cab Co., Four Star 'Cab Co., Venus Cab Corp., Jupiter Cab Corp., and Leo Cab Co. At the time petitioner filed its petitions herein with respect to Gemini Cab Co. (docket No. 4660-69), Four Star Cab Co. (docket No. 4661-69), Venus Cab Corp. (docket No. 4662-69), Jupiter Cab Corp. (docket No. 4663-69), and Leo Cab Co. (docket No. 4664-69), its principal office was located at Chicago, Ill.
Gemini Cab Co. filed corporate income tax returns (Form 1120) for its taxable years ended July 31,1964, July 31,1965, and July 31,1966, with the district director of internal revenue at Chicago, Ill.
Four Star Cab Co. filed corporate income tax returns (Form 1120) for its taxable years ended June 30,1964, June 30, 1965, and June 30, 1966, with the district director of internal revenue at Chicago, Ill.
Venus Cab Corp. filed corporate income tax returns (Form 1120) for its taxable years ended September 30, 1964, September 30, 1965, and September 30,1966, with the district director of internal revenue at Chicago, Ill.
Jupiter Cab Corp. filed corporate income tax returns (Form 1120) for its taxable years ended July 31, 1964, July 31, 1965, and July 31, 1966, with the district director of internal revenue at Chicago, Ill.
Leo Cab Co. filed corporate income tax returns (Form 1120) for its taxable years ended September 30,1964, September 30,1965, and September 30, 1966, with the district director of internal revenue at Chicago, Ill.
Throughout the years here in question the petitioners’ outstanding stock was owned solely by Arthur Dickholtz. The petitioners, during the years in question, operated a fleet of taxicabs in the city of Chicago. Petitioners are considered to be among the “independent” companies as distinguished from Yellow Cab Co. and Checker Taxi Co.
Petitioners purchased taxicab licenses on the dates and for the amounts indicated below; petitioners also claimed deductions for the amortization of such license costs, as follows:
ifgesiiifsis 1 ÉÜMM t-Trt ri r-T CÍ* COCÓ'CÍCCCOCO'CO-sssssssssssss S §$3$£8888 IMIlls'llSSlIS I fgllill ^‘^.H^rírÍTH efcíc^fcírt* «O* mcocommT^co SSSB£SSS8g¡gg£S g 833ÍB8&B lllliglllllis iIgiiill rt“rírH-rt'-rrt'rt-rH cfeíw'círt" TO CO SggSgSSSggSgSS! g ssss 1 fill HHHH r4*4 ^"r-TríC^N r-T t-Tr-T SSWgggggggg Mummt -T SSSSSSSS^g^SS 5S gg£g$S$ 8SSggggggggigg§°goggoog llggliillgiillllilligl .■W^rfW-rfrfcffrfrfrf^^cfef^efffjJ SffIff f f f § §§ S !!!!!!! ssss 9/30 9/30 9/30 7,376.36 24,911.94 1 60,971.38 60,812.92 42,342.82 317.29 J9.?JL 00 '688 ‘i 2,389.00 S' 903.85 2,389.00 604.17 1,035.00 184.37 316.00 $2,464.00 $347.00 211.00 16.41 430.29 1,963.15 $4,165.00 211.00 428.00 1,961.00 $4’111! 00 428.00 1,961.00 $105.36 $211.00 250.00 428.00 653.85 1,961.00 6/30 9/65 $11,800.00 6/30 1/64 965.77 7/31 1/64 1,964.29 4/64 8,500.00 7/31 1/64 4,747.02 65 1/64 1,448.66 55 Leo Cab Co. Venus Cab Corp.._. Public Taxi Service. Jupiter Cab Corp. Courteous Cab Co. Four Star Cab Co. Gemini Cab Co___ 1969 1968 1967 1966 1965 f96I Riscal year Total Cost Date purchased Company Amortization of Taxicab
On May 18, 1934, the Chicago City Council passed an ordinance regulating the operation of taxicabs in the city of Chicago. This ordinance was a franchise ordinance granting permission and authority for the operation of taxicabs within the city and for the appointment of a public vehicle license commissioner. The ordinance provided for the issuance of licenses to operate taxicabs in the city for a term ending December 31, 1940, unless sooner terminated or revoked as provided in the ordinance. Based upon this ordinance, 4,108 taxicab licenses were issued in the city of Chicago. The Yellow Cab Co. received 2,166 licenses and the Checker Taxi Co. received 1,500. The remaining 442 licenses were received by “independents” including petitioner, Public Taxi Service, Inc.
As a result of the following period of economic depression, the operation of taxicabs in the city of Chicago resulted in unprofitable operations from the standpoint of the drivers and licensees, resulting in strikes and other violence on the city streets. In 1937, it was determined that a reduction in the number of taxicabs operated in the city and an increase in the fares charged was a matter of public convenience and necessity. Accordingly, on December 22, 1937, the city council passed an ordinance providing for a method of voluntary surrender by licensees of enough of their licenses to reduce the total from 4,108 to 3,000. This ordinance provided that in the event the number of authorized licenses should later be increased above the 3,000 figure, such additional licenses, not to exceed the number surrendered, should first be issued to licensees ratably in proportion to the number voluntarily surrendered by each licensee. The ordinance also provided that authority of the licensees to operate taxicabs under the 1934 ordinance be extended to December 31, 1945, provided the licensees accepted the terms of the 1937 ordinance.
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TietjeNS, Judge:
The Commissioner determined the following income tax deficiencies in these consolidated cases:
Taxable Docket year Deficiency Petitioners No. ended
W. K. Co. and its wholly owned Subsidiary — Public Taxi Service, Ine_ 4668-69 Courteous Cab Co.-.. 4669-69 Courteous Cab Co., successor by merger to Gemini Cab Co_.— 4660-69 Courteous Cab Co., successor by merger to Four Star Cab Co. 4661-69 Courteous Cab Co., successor by merger to Venus Cab Corp. 4662-69 Courteous Cab Co., successor by mergor to Jupiter Cab Corp. 4663-69 Courteous Cab Co., successor by merger to Leo Cab Co.. 4664-69 [9/30/64 19/30/66 (9/30/66 6/30/66 [7/31/64 17/31/65 (7/31/66 [6/30/64 16/30/65 (6/30/66 |9/30/64 l9/30/65 (9/30/66 7/31/64 (7/31/66 (7/31/66 [9/30/64 (9/30/65 (9/30/66 $3,726.31 10,683.22 24,494.52 1,983.84 142.19 893.73 1,501.92 18.41 103.33 100.96 457.77 592.23 586.00 166.98 659.79 152.00 95.50 471.94 1,174.08
The sole issue presented for our resolution is whether petitioners are entitled to amortize certain taxicab licenses or whether such licenses cannot be amortized because they have indeterminate useful, lives.
FINDINGS OF FACT
Some of the facts have been stipulated. The stipulation and exhibits attached thereto are incorporated herein by this reference.
Petitioners, W. K. Co. and its wholly owned subsidiary, Public Taxi Service, Inc., are corporations organized and doing business under the laws of the State of Illinois and at the time they filed their petition herein their principal office was located at Chicago, Ill. Both corporations filed consolidated corporate income tax returns (Form 1120) for the taxable years ended September 30, 1964, September 30, 1965, and September 30, 1966, with the district director of internal revenue at Chicago, Ill.
Petitioner, Courteous Cab Co., is a corporation organized and doing business under the laws of the State of Illinois and at the time it filed its petition herein its principal office was located at Chicago, Ill. Its corporate income tax return (Form 1120) for the taxable year ended June 30, 1966, was filed with the district director of internal revenue at Chicago, I'll.
Courteous Cab Co. is also the successor by merger dated January 13, 1969, to Gemini Cab Co., Four Star 'Cab Co., Venus Cab Corp., Jupiter Cab Corp., and Leo Cab Co. At the time petitioner filed its petitions herein with respect to Gemini Cab Co. (docket No. 4660-69), Four Star Cab Co. (docket No. 4661-69), Venus Cab Corp. (docket No. 4662-69), Jupiter Cab Corp. (docket No. 4663-69), and Leo Cab Co. (docket No. 4664-69), its principal office was located at Chicago, Ill.
Gemini Cab Co. filed corporate income tax returns (Form 1120) for its taxable years ended July 31,1964, July 31,1965, and July 31,1966, with the district director of internal revenue at Chicago, Ill.
Four Star Cab Co. filed corporate income tax returns (Form 1120) for its taxable years ended June 30,1964, June 30, 1965, and June 30, 1966, with the district director of internal revenue at Chicago, Ill.
Venus Cab Corp. filed corporate income tax returns (Form 1120) for its taxable years ended September 30, 1964, September 30, 1965, and September 30,1966, with the district director of internal revenue at Chicago, Ill.
Jupiter Cab Corp. filed corporate income tax returns (Form 1120) for its taxable years ended July 31, 1964, July 31, 1965, and July 31, 1966, with the district director of internal revenue at Chicago, Ill.
Leo Cab Co. filed corporate income tax returns (Form 1120) for its taxable years ended September 30,1964, September 30,1965, and September 30, 1966, with the district director of internal revenue at Chicago, Ill.
Throughout the years here in question the petitioners’ outstanding stock was owned solely by Arthur Dickholtz. The petitioners, during the years in question, operated a fleet of taxicabs in the city of Chicago. Petitioners are considered to be among the “independent” companies as distinguished from Yellow Cab Co. and Checker Taxi Co.
Petitioners purchased taxicab licenses on the dates and for the amounts indicated below; petitioners also claimed deductions for the amortization of such license costs, as follows:
ifgesiiifsis 1 ÉÜMM t-Trt ri r-T CÍ* COCÓ'CÍCCCOCO'CO-sssssssssssss S §$3$£8888 IMIlls'llSSlIS I fgllill ^‘^.H^rírÍTH efcíc^fcírt* «O* mcocommT^co SSSB£SSS8g¡gg£S g 833ÍB8&B lllliglllllis iIgiiill rt“rírH-rt'-rrt'rt-rH cfeíw'círt" TO CO SggSgSSSggSgSS! g ssss 1 fill HHHH r4*4 ^"r-TríC^N r-T t-Tr-T SSWgggggggg Mummt -T SSSSSSSS^g^SS 5S gg£g$S$ 8SSggggggggigg§°goggoog llggliillgiillllilligl .■W^rfW-rfrfcffrfrfrf^^cfef^efffjJ SffIff f f f § §§ S !!!!!!! ssss 9/30 9/30 9/30 7,376.36 24,911.94 1 60,971.38 60,812.92 42,342.82 317.29 J9.?JL 00 '688 ‘i 2,389.00 S' 903.85 2,389.00 604.17 1,035.00 184.37 316.00 $2,464.00 $347.00 211.00 16.41 430.29 1,963.15 $4,165.00 211.00 428.00 1,961.00 $4’111! 00 428.00 1,961.00 $105.36 $211.00 250.00 428.00 653.85 1,961.00 6/30 9/65 $11,800.00 6/30 1/64 965.77 7/31 1/64 1,964.29 4/64 8,500.00 7/31 1/64 4,747.02 65 1/64 1,448.66 55 Leo Cab Co. Venus Cab Corp.._. Public Taxi Service. Jupiter Cab Corp. Courteous Cab Co. Four Star Cab Co. Gemini Cab Co___ 1969 1968 1967 1966 1965 f96I Riscal year Total Cost Date purchased Company Amortization of Taxicab
On May 18, 1934, the Chicago City Council passed an ordinance regulating the operation of taxicabs in the city of Chicago. This ordinance was a franchise ordinance granting permission and authority for the operation of taxicabs within the city and for the appointment of a public vehicle license commissioner. The ordinance provided for the issuance of licenses to operate taxicabs in the city for a term ending December 31, 1940, unless sooner terminated or revoked as provided in the ordinance. Based upon this ordinance, 4,108 taxicab licenses were issued in the city of Chicago. The Yellow Cab Co. received 2,166 licenses and the Checker Taxi Co. received 1,500. The remaining 442 licenses were received by “independents” including petitioner, Public Taxi Service, Inc.
As a result of the following period of economic depression, the operation of taxicabs in the city of Chicago resulted in unprofitable operations from the standpoint of the drivers and licensees, resulting in strikes and other violence on the city streets. In 1937, it was determined that a reduction in the number of taxicabs operated in the city and an increase in the fares charged was a matter of public convenience and necessity. Accordingly, on December 22, 1937, the city council passed an ordinance providing for a method of voluntary surrender by licensees of enough of their licenses to reduce the total from 4,108 to 3,000. This ordinance provided that in the event the number of authorized licenses should later be increased above the 3,000 figure, such additional licenses, not to exceed the number surrendered, should first be issued to licensees ratably in proportion to the number voluntarily surrendered by each licensee. The ordinance also provided that authority of the licensees to operate taxicabs under the 1934 ordinance be extended to December 31, 1945, provided the licensees accepted the terms of the 1937 ordinance.
Pursuant to the ordinance of December 22, 1937, the Yellow Cab Company voluntarily surrendered 57l of its licenses and the Checker Taxi Company surrendered 500 of its licenses. Other licensees (independents) surrendered the balance, representing 37 licenses, of the required reduction.
On June 26, 1945, the city council passed an extension ordinance extending the term of the ordinance of December 22,1937, for 5 years, ending December 31, 1950.
On December 28, 1945, the city council passed a resolution reciting that demands for all forms of local transportation had increased 'on account of World War II and directed the public vehicle license commissioner to enforce the provisions of the ordinances of December 22, 1937, and June 26,1945, by compelling full operation of 3,000 taxicabs in the city of Chicago by January 15,1946. In the event that full operation of 3,000 taxicabs could not be accomplished by existing licensees, the commissioner was authorized to take steps for licensing additional taxicabs in the city.
On February 28, 1946, the City Council of the City of Chicago passed an ordinance authorizing the public vehicle license commissioner to issue up to 275 additional taxicab licenses. These licenses were to be issued to veterans of World War II (veterans licenses). However, under the ordinance, such licensees did not acquire any rights under or ’by virtue of the ordinance granting permission and authority for the operation of taxicabs in the city of Chicago and for the appointment of a public vehicle license commissioner, passed by the city council on May 18,1934, and as subsequently amended. On July 11, 1946, the ordinance of February 28, 1946, was amended by the city council to provide authorization for an increase in the issuance of additional taxicab licenses from 275 to 770.
On February 5, 1947, Chapter 28 of the Muncipal Code of Chicago was amended to provide that the demand for taxicab service in the city of Chicago was found to exceed the 3,000 taxicabs authorized by the ordinance of December 22,1937, and ¡that the public vehicle license commissioner was authorized to issue taxicab licenses not to exceed 5,500 in number. This amendment also provided that no taxicab license was to be issued to any person unless he was authorized to operate taxicabs by acceptance of the ordinance granting permission and authority for the operation of taxicabs within the city of Chicago passed on May 18, 1934, and as subsequently amended.
On February 6, 1948, an ordinance was passed by the city council repealing the ordinance of February 28,1946, as amended on July 11, 1946, which provided authorization for the issuance of additional taxicab licenses not to exceed 950 in number.
The expiration date of the ordinance granting permission and authority for the operation of taxicabs within the city of Chicago and for the appointment of a public vehicle license commissioner passed by the city council on May 18, 1934, as subsequently amended, was extended beyond December 31, 1950, pending negotiations for a revised or new ordinance. Such expiration date was first extended to April 1,1951, then to July 1,1951, September 30,1951, and finally to December 31,1951, by ordinances passed by the city council on December 29, 1950, March 2, 1951, June 14, 1951, and September 20, 1951, respectively. Sudh extensions of the franchise ordinance of May 18, 1934, as subsequently amended, were expressly made subject to the continuation of the right to operate taxicabs within the city by all persons having taxicab licenses on December 31, 1950, under the provisions of the franchise ordinance extended and under the provisions of the ordinance authorizing the public vehicle license commissioner to issue not to exceed 950 additional taxicab licenses passed February 6, 1948, as subsequently amended.
On January 30, 1952, the city council again amended chapter 28 of the Municipal Code of Chicago, relating to public passenger vehicles, and passed a new franchise ordinance granting permission and authority for the operation of taxicabs within the city of Chicago until December 31, 1956. Chapter 28 was amended to provide, inter alia, for the assignability of a public passenger vehicle license, but only in the event of the licensee’s death or induction or recall into the Armed Forces of the United States for active duty. The franchise ordinance passed May 18,1934, and all ordinances by which such franchise ordinance was amended and extended prior to adoption of the new franchise ordinance on January 30, 1952, were repealed.
The additional taxicab licenses, not to exceed 950 in number, authorized for issuance under the ordinance of February 6,1948, were merely nonassignable personal privileges in the hands of a licensee. Accordingly, such licenses would l apse or be revoked as the result of the death, incapacity, or call to military service of a licensee. This accounted for the attrition which resulted in a reduction from a total of 3,950 licenses authorized for issuance as of February 6,1948, to 3,761 on January 30, 1952. No reduction in the number of taxicab licenses was ordained by the city council during this period.
Arthur Dickholtz was among the licensees who filed written acceptance of the new franchise ordinance passed January 30, 1952. The franchise ordinance, not having been extended, expired on December 31,1956.
On August 24,1959, the City Council of Chicago passed an ordinance for an increase in the number of taxicab licenses, declaring that 4,600 taxicabs were required by the public convenience and necessity for adequate citywide service. This ordinance was made effective January 1, 1960, and authorized the public vehicle license commissioner to issue additional licenses within the maximum number of 4,600. Under this ordinance, Yellow Cab Co. and Checker Taxi Co. recovered the number of licenses they had voluntarily surrendered under the ordinance of December 22,1937. 839 new licenses were authorized for issuance and 257 were taken away from the veterans, making a total of 1,096 licenses available which were allocated as follows:
Total Yellow and Indepen- Veterans Checker dents
Prior to 1/1/60 . 3,761 2,595 405 761 839 1,071 25 (267)
1/1/60. 4,600 3,666 430 504
Chapter 28 of the Municipal Code of Chicago, relating to public passenger vehicles, was amended by the city council on July 1, 1963, by adopting an ordinance which provides in pertinent part, as follows:
Section 2. The Municipal Code of Chicago is amended by adding Section 28-1.1 as follows:
28-1.1. Subject to the conditions and limitations of this chapter, exclusive permission and authority are hereby granted to the licensees hereunder and their assigns to operate the taxicabs licensed hereunder upon the public streets and other public ways within the corporate limits of the City unless terminated or revoked as hereinafter provided.
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Section 5. Section 28-9.1 of the Municipal Code of Chicago is amended to read as follows: