Court Opinion

ID: 4599941
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:24:26.947861+00
Date Added: 2024-06-11T07:52:13.115006
License: Public Domain

HART COTTON MILLS, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Hart Cotton Mills v. CommissionerDocket Nos. 9032, 12781.United States Board of Tax Appeals9 B.T.A. 1062; 1928 BTA LEXIS 4317; January 3, 1928, Promulgated 1928 BTA LEXIS 4317">*4317  The value of assets acquired for stock determined for invested capital and depreciation purposes.  W. W. Ross, Esq., for the petitioner.  L. C. Mitchell, Esq., for the respondent.  TRAMMELL9 B.T.A. 1062">*1062  These proceedings are for the redetermination of deficiencies in income and profits taxes for 1919 and 1920 in the amounts of $19,410.51 and $27,108.83, respectively.  The two proceedings were consolidated for hearing and decision.  The errors assigned are the action of the Commissioner in refusing to accept the valuation determined by the petitioner of a cotton factory, which had been acquired for stock in 1916, for invested capital or depreciation purposes, and in failing to consider the cost of additions made in subsequent years for the same purposes, and in reducing 9 B.T.A. 1062">*1063  the invested capital for the years involved on account of income and profits taxes for prior years, which latter error was abandoned in the amended petition.  FINDINGS OF FACT.  The petitioner is a corporation organized under the laws of North Carolina, with its principal place of business at Tarboro.  On October 2, 1916, the petitioner acquired a cotton factory in1928 BTA LEXIS 4317">*4318  exchange for $150,000 par value of its stock.  This cotton factory had an actual cash value at the time acquired of $200,000, which included land having a value of $83,000.  In 1917 the petitioner made additions to its plant in the amount of $86,176.08, in 1918 it made additions in the amount of $1,646.10, in 1919 it made additions in the amount of $75,807.51, and in 1920 it made additions in the amount of $13,834.09.  OPINION.  TRAMMELL: The cotton factory should be included in invested capital at $200,000.  For depreciation purposes the value of the land, $83,000, should be subtracted from that amount.  On the question of the additions to the plant during the years 1917, 1918, 1919, and 1920, we find that the respondent, in his recomputation of the deficiency under the Board's prior decision in the case of the same petitioners for 1917, , which was introduced in evidence, allowed additions to plant in 1917 and 1918 to be included in the amount stated in the above findings of fact with respect to those years.  The evidence satisfies the Board that additions were made as set out in our findings of fact for the respective years.  The amounts should be1928 BTA LEXIS 4317">*4319  included in invested capital during the years involved and should be considered in determining the allowances for exhaustion, wear and tear.  Judgment will be entered on 15 days' notice, under Rule 50.Considered by MORRIS, MURDOCK, and SIEFKIN.