Court Opinion

ID: 6803165
Source: CourtListenerOpinion
Date Created: 2022-07-23 18:43:42.564795+00
Date Added: 2024-06-11T16:03:19.494268
License: Public Domain

*1254OPINION.
Smith:
Section 234(a) of the Revenue Act of 1918 permits a corporate taxpayer to deduct from gross income:
(4) Losses sustained during the taxable year and not compensated for by insurance or otherwise.
(7) A reasonable allowance for the exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence.
At the beginning of the fiscal year ended May 31, 1920, the petitioner had in its equipment four steam-jacketed cookers which had cost it in 1910 $2,500. These cookers had a value on March 1, 1913, of approximately $2,200. The petitioner’s books of account do not show the cost of the cookers separately from the cost of other equipment. The cost was, however, included in the machinery and equipment account. The depreciated cost of this asset at the beginning of the fiscal year under review was $1,375. The salvage value was negligible. In our opinion the petitioner sustained a loss when he discarded these cookers of the depreciated cost of them, or $1,375.

Order of redetermination will be entered on 15 days' notice, under Rule 50.