Opinion ID: 272737
Heading Depth: 1
Heading Rank: 1

Heading: Useful Life of the Hackensack Buildings

Text: 4 Turner contends that the district court erred in upholding the Commissioner's determination that the useful life for depreciation purposes of three warehouse buildings in Hackensack, New Jersey, was 33 1/3 years instead of 25 years, as Turner had claimed in its tax returns. Turner constructed these buildings in 1952 when it shifted its repair and storage facilities from Maspeth, Long Island, to New Jersey. The State of New Jersey's Highway Department condemned the buildings after the tax years in question. 5 Since the stipulation contained only a technical description of the buildings, resolution of this issue turned on the oral testimony. Francis B. Warren, Turner's executive vice president and treasurer, testified that the buildings were open air storage and repair facilities made from light, prefabricated materials, that they received rough treatment from the company's heavy construction equipment, and that 25 years was a reasonable estimate of their useful lives. The government countered with testimony by the revenue agent who had examined these buildings — a graduate engineer who had made similar estimates for the Commissioner since 1946. He described the buildings and explained his reasons for concluding that these structures had a useful life of 40 years. 6 After reviewing this conflicting evidence, Judge Levet concluded that the taxpayer had failed to meet its burden of proving that the Commissioner's estimate — the compromise figure of 33 1/3 years — was incorrect. Turner refers us to many cases which have set the useful lives of warehouse buildings at 25 years or less, and urges us to reverse the decision of the trial judge. But the question here is the useful life of these particular structures. The record reveals that the Hackensack buildings replaced Maspeth buildings having an admitted useful life of 50-60 years. Under these circumstances, we find no error in the lower court's conclusion that neither side had affirmatively proved its position. In such a case, the taxpayer, who has the burden of proof, cannot prevail.