Court Opinion

ID: 4607509
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:40:46.013785+00
Date Added: 2024-06-11T07:53:32.593356
License: Public Domain

DONA MEYERHOFF, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Meyerhoff v. CommissionerDocket No. 5886.United States Board of Tax Appeals11 B.T.A. 529; 1928 BTA LEXIS 3783; April 12, 1928, Promulgated *3783  1.  The determination of the Commissioner as to depreciation and profit on the sale of furniture and fixtures is approved, in the absence of sufficient evidence to show that he committed error.  2.  This Board has not jurisdiction to consider alleged error of Commissioner with respect to application of credit for overassessment and overpayment of taxes.  Charles F. Byers, Esq., for the petitioner.  J. Harry Byrne, Esq., for the respondent.  LOVE *529  In the petition it is stated that the taxes in controversy are income and excess-profits taxes for the years 1918 and 1919 in the amount of approximately $1,800.  The deficiency notice served notice of a determination of an overassessment for the year 1918 of $190.60, and a deficiency for the year 1919 of $209.41.  The respondent in his answer denies that any year other than 1919 is involved, and denies that any amount greater than $209.41 is involved.  Petitioner charges six errors on the part of the Commissioner, substantially as follows: (1) That the Commissioner erred in refusing to allow sufficient depreciation on March 1, 1913, value or on cost of subsequently acquired furniture and fixtures. *3784  (2) That the Commissioner erred in his computation of profit on the sale of furniture and fixtures sold in 1919.  *530  (3) The Commissioner erred in refusing to deduct cost of furniture and fixtures purchased in 1919 as an expense for that year, yet refused to consider its cost in computing profit of its sale.  (4) The Commissioner erred in refusing to allow as a part of the cost of a tract of land, $100 paid for abstracts, deed and ordinary expenses affecting the sale of the land.  (5) The Commissioner erred in assessing additional tax for the year 1918, pending a claim for abatement.  (6) The Commissioner erred in refusing to allow the overassessment and overpayment of tax by Abe Meyerhoff for 1919 to be applied as a credit on taxes found to be due by petitioner.  FINDINGS OF FACT.  The petitioner is an individual residing in Houston, Tex., and is the widow of Abe Meyerhoff, who died after the year 1919.  The following allegations were in the petition and respondent in his answer admitted same as true: Prior to the year 1918 and until his death in the month of December of year 1923, taxpayer was the wife of Abe Meyerhoff, and is the survivor in community estate*3785  owned jointly at time of his death, and is the independent executrix and sole heir of said Abe Meyerhoff, who was for many years prior thereto and during the years 1918 and 1919 engaged in retail merchandise business in Hallettsville, Texas; during the year 1919, he lost his health, sold out his business, and thereafter made his residence in Houston, Texas.  Abe Meyerhoff filed his individual income tax returns for each of the years 1918 and 1919 and paid tax thereon.  Subsequently to wit, on or about March 10, 1921, he filed amended income tax returns for his share of the community income, and taxpayer at that time filed her income tax returns for said years for her share of the community income, and filed at the same time with the Collector an agreement, duly executed by Abe Meyerhoff and taxpayer, authorizing and directing the Commissioner of Internal Revenue that credit for the refund or abatement of income taxes for the years 1918 and 1919 accruing to either of them by reason of joint or separate income tax returns filed or to be filed by them, or be divided as between the two of them, as may be determined by the provisions of*3786 T.D. 3071. The storehouse in Hallettsville was constructed, apparently, in 1909, and in that year certain fixtures were purchased which remained in use and were on hand and were sold in 1919.  For a number of those items original invoices showing cost were presented.  The cost of such items totaled $2,122.73.  One item for which invoice was presented, purchased in 1919, showed a cost of $614.50.  In addition to the above, there was in the building shelving constructed at the time of, and in connection with, the construction of the house, and there were attached to the building also counters built at the same time, all of which had a value on March 1, 1913, of $4,000.  Neither the cost of material nor the cost of construction of that shelving and counters could be segregated in later years from the cost of construction *531  of the house itself.  There were other furniture and fixtures on hand in 1919 and sold in that year for which no invoices were obtainable, purchased in 1909, and on March 1, 1913, had a value as indicated below: Safe, desk, typewriter, etc$300.00Electric System200.00500.00A Delco light system bought in 1912 had a*3787  March 1, 1913, value of $700; showcases bought in 1916 cost $1,200.  The record does not disclose what time in 1919 the sale of this property was made.  In the computation attached to the deficiency notice, depreciation on the building, on the basis of $22,500, March 1, 1913, value, was allowed at 3 per cent in the amount of $675.  The record does not disclose how the sale was made, whether in lump sum for all assets, or prices were paid for each class of assets, or in fact, whether the sale of all assets was made to one person or to several persons.  There was no evidence of the March 1, 1913, value of articles inventoried at $2,122.73, representing the cost of the inventory items bought in 1909.  The computation attached to the deficiency notice does not show that any depreciation was allowed on furniture and fixtures for 1919.  OPINION.  LOVE: The record in this case is very unsatisfactory.  The first assignment of error is to the effect that the Commissioner refused to allow sufficient depreciation on furniture and fixtures.  We are not informed what amount of depreciation the Commissioner did allow, if any.  Moreover, the March 1, 1913, value of some of the furniture and*3788  fixtures, bought prior thereto, is not disclosed.  The shelving and counters were constructed at the time of, and in connection with, the construction of the building, the March 1, 1913, value of which was $22,500, as claimed by petitioner and accepted by the Commissioner.  Apparently the cost of the shelving and counters went in as part of the cost of the building.  Neither the cost of the material nor the cost of labor for the shelving and counters could be segregated from the cost of the building.  If their cost did go into the cost of the building, then depreciation taken on the building included depreciation on those items.  John M. Moore, witness for the petitioner, satisfactorily qualified as an expert on valuation of furniture and fixtures, and we have accepted his valuations where given.  He stated that in his opinion an average rate of 10 per cent depreciation on all furniture and fixtures was fair and reasonable.  Should that rate be accepted, we are still met with at least two insurmountable difficulties: (1) The March 1, 1913, value of some of the fixtures was not shown.  *532  (2) We can not determine that the shelving and counters should be included in the*3789  list of furniture and fixtures for depreciation purposes.  After eliminating the above two groups of items and not knowing how such elimination would affect the average rate of depreciation, we are unable to decide what a proper rate is no the other items.  In view of the record, we must overrule the first assignment of error and approve the action of the Commissioner.  With reference to the second assignment of error, it is sufficient to point out that the record does not disclose the terms and conditions of sale, whether the whole mercantile business was sold for a lump sum, or in classes; and we are not informed in regard to the price paid, in whole or in part.  That assignment of error is overruled and the action of the Commissioner approved.  For want of evidence in regard to the facts necessarily involved in the third assignment of error, the action of the Commissioner is approved.  There is no evidence in the record in regard to matters involved in the fourth assignment of error, hence the action of the Commissioner is approved.  With reference to assignments of error Nos. 5 and 6, there being no deficiency determined for 1918, and the handling of an overassessment*3790  being an administrative matter, the Board has no jurisdiction to pass upon either of those assignments.  Judgment will be entered for the respondent.