Court Opinion

ID: 4631722
Source: CourtListenerOpinion
Date Created: 2020-11-21 03:10:14.358479+00
Date Added: 2024-06-11T07:57:46.272995
License: Public Domain

APPEAL OF HAZARD MANUFACTURING CO.Hazard Mfg. Co. v. CommissionerDocket No. 1658.United States Board of Tax Appeals2 B.T.A. 1152; 1925 BTA LEXIS 2163; October 30, 1925, Decided Submitted May 12, 1925.  1925 BTA LEXIS 2163">*2163  With proof of the life of only a part of the depreciable assets, it is impossible for the Board to determine error on the part of the Commissioner in that respect.  W. A. Bollinger and C. J. Maguire, Esqs., for the taxpayer.  Willis D. Nance, Esq., for the Commissioner.  LOVE 2 B.T.A. 1152">*1152  Before STERNHAGEN, LANSDON, GREEN, and LOVE.  This appeal is from the determination of a deficiency in income and profits taxes of $6,972.72 for 1918 and $8,414.43 for 1920.  The taxpayer alleged the following errors: (a) Failure on the part of the Commissioner to give credit for the entire amount of income and profits taxes assessed and paid for the year ending December 31, 1917; (b) Failure to allow proper amount of depreciation for the year ending December 31, 1918; (c) Erroneous inclusion of tax-exempt Liberty bond interest in determining the taxable net income for the year ending December 31, 1919; (d) Failure to allow proper amount of depreciation for the year ended December 31, 1920.  The taxpayer also asked that its profits taxes for the year 1918 be determined under sections 327 and 328 of the Revenue Act of 1918.  This relief1925 BTA LEXIS 2163">*2164  was not asked in the hearings before the Commissioner.  At the hearing before the Board the taxpayer abandoned its assignments of error (a) and (c).FINDINGS OF FACT.  The taxpayer is a Pennsylvania corporation, with its principal office at Wilkes-Barre.  It manufactures wire rope and wire cables.  In the manufacture of its products there is in use a great variety of machinery, some of it heavy machinery, subject to heavy strain and of shorter life than the lighter machinery.  2 B.T.A. 1152">*1153  There are as many as seven units, representing different kinds of heavy machinery, and those seven units, in cost, comprise less than half of the total cost of all machinery.  The life of the heavy machinery is from four to seven years.  In 1918 taxpayer's plant was used for making artillery traces and other war material for the Government, and was working over-time, under urgent orders; was forced to use inefficient labor and was subject to many abnormal conditions, which resulted in an abnormal wear and tear of its machinery.  The Commissioner allowed depreciation for 1918 at a rate of 10 per cent, and for 1920 at a rate of 5 per cent.  The basis for depreciation is not in dispute. 1925 BTA LEXIS 2163">*2165  DECISION.  The determination of the Commissioner is approved.  OPINION.  LOVE: It will be noted that the only evidence of life of machinery in taxpayer's plant is of the heavy machinery, which comprises less than half, in cost, of the whole - how much less than half we are not informed.  It is impossible to determine the composite life of all of the machinery with such a paucity of evidence.