Court Opinion

ID: 4624124
Source: CourtListenerOpinion
Date Created: 2020-11-21 02:54:30.860967+00
Date Added: 2024-06-11T07:56:28.632043
License: Public Domain

ELMWOOD CASTINGS CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Elmwood Castings Co. v. CommissionerDocket Nos. 11280, 19672.United States Board of Tax Appeals13 B.T.A. 131; 1928 BTA LEXIS 3308; July 30, 1928, Promulgated *3308 James B. O'Donnell, Esq., for the petitioner.  Harold Allen, Esq., for the respondent.  VAN FOSSAN *131  In the first of the above proceedings the respondent has determined a deficiency of $3,177.49 for the calendar year 1919, while in the second there is an alleged deficiency of $1,818.73 for the calendar year 1920.  Of five errors alleged in the petitions but two are before us for consideration, the others having been abandoned at the hearing.  These are special assessment for 1919 and depreciation on buildings and equipment for both years.  The proceedings were duly consolidated for hearing and decision.  FINDINGS OF FACT.  The petitioner is an Ohio corporation located at St. Bernard, Ohio.  It was engaged in the production of grey iron castings.  Previous to 1916 the bulk of petitioner's business was transacted with two or three concerns on cost-plus contracts, it being a subsidiary company.  Until this date it had no bookkeeper and kept almost no books of account, except a list of bills payable.  On representations duly made special assessment was granted for the years 1917 and 1918.  The petitioner had a main building 110 feet by 300 feet*3309  of steel and brick construction, fully equipped with necessary supports for electric traveling cranes and other machinery useful in its business.  It had a second building 80 feet by 200 feet of concrete and steel sash; a pattern storage building 150 feet by 30 feet, two stories high; one truscon steel building, and other sheds and small buildings.  In the main building the equipment consisted of 3 ten-ton cranes and several smaller cranes, several jarring machines, molding machines, an engine, dynamo and motors, blowers, 2 cupolas, 5 steel rattlers, core ovens and 35 small molding machines.  It also had two automobile trucks.  During 1919 petitioner employed an average of from 225 to 250 men; in 1920 an average slightly in excess of 250; in 1921 to 1926 approximately one-half as many as in the preceding two years.  Before 1916 it had 100 men or less.  The cost and values of the buildings and equipment are not in dispute, the only controversy being as to the rates of depreciation on buildings and equipment.  In the production of iron castings there is a frequent change of temperature of the building, much moisture is released and sulphuric *132  and other fumes escape.  The*3310  effect of these conditions is to cause excessive rust and rapid deterioration.  Reasonable annual rates of depreciation for the years 1919 and 1920 are as follows: on the buildings 5 per cent; on the equipment 10 per cent; on the motor vehicles 20 per cent.  OPINION.  VAN FOSSAN: The evidence in this case clearly established the reasonableness of the rates of depreciation set forth in the findings of fact and depreciation should be computed by employing such rates.  The evidence does not justify the granting of special assessment.  Judgment will be entered under Rule 50.