Opinion ID: 1549711
Heading Depth: 1
Heading Rank: 2

Heading: The Dock Repairs.

Text: In the autumn of 1918, and therefore within the fiscal year of 1919, a large part of the taxpayer's dock  400 out of 2,300 feet  slid into the Buffalo River. It had to be replaced, but before that could be done the channel had to be cleared and many tons of ore salvaged, which had gone out with the dock. Thereafter the dock was rebuilt, and the land back of it filled in; it had gone out to a width of fifty feet. All this was done in most substantial fashion; loaded cribs for the dock, and for the hinterland, piles driven to bed rock with a two foot concrete layer holding their tops together. The Commissioner allowed the cost of clearing the channel, recovering the ore and dredging out the back fill as an expense, but he refused to allow the cost of the new construction, except to the unamortized value of the old dock which he did allow as a loss. The taxpayer asserts that he should have allowed the cost of the new dock as a necessary or ordinary expense under section 234 (a) (1) of the Revenue Act of 1918 (40 Stat. 1077). The Board thought and we agree that the situation was within our decision in Hubinger v. Com'r, 36 F.(2d) 724, where we said that in the main, losses under Revenue Act 1918, § 214 (a) (4) and section 214 (a) (6), 40 Stat. 1066, are those occasioned by casualties, and that repairs, so far as they are ordinary and necessary expenses, are the more or less continuous minor break-down and wastage of machinery, buildings and the like. We made no pretence that this classification was mutually exclusive; indeed we noticed that a small fire for instance might be repaired by an ordinary and necessary expense, while a larger one would be a loss. To this we adhere, in spite of Zimmern v. Com'r, 28 F. (2d) 769 (C. C. A. 5), which we discussed at the time. It is too plain for argument that if this be the right rule, the repairs were not within section 234 (a) (1), but that the only allowance possible was as a loss. As the taxpayer made no effort to prove a loss as required by the Regulations (articles 49 and 141, Regulations 45), the action of the Board was correct and is affirmed.