Court Opinion

ID: 4595570
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:15:18.647592+00
Date Added: 2024-06-11T07:51:27.905083
License: Public Domain

YAKIMA TRANSFER & STORAGE CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Yakima Transfer & Storage Co. v. CommissionerDocket No. 3966.United States Board of Tax Appeals10 B.T.A. 244; 1928 BTA LEXIS 4155; January 26, 1928, Promulgated *4155  1.  The provisions of section 331 of the Revenue Act of 1918 apply to the facts herein and under such section the respondent correctly computed the petitioner's invested capital for the taxable year.  2.  The respondent's computation of depreciation is not shown by evidence to be erroneous.  3.  The Board does not have jurisdiction over the petitioner's tax liability for the years 1920 and 1921.  F. O. Straight, C.P.A., for the petitioner.  Arthur H. Murray, Esq., for the respondent.  LANSDON *244  The respondent has asserted a deficiency in income and profits tax for the year 1919 in the amount of $107.28, and an overassessment *245  for the year 1920 in the amount of $71.48.  The year 1921 is included in the notice of deficiency, but with no assertion either of a deficiency or an overassessment.  The petitioner alleges that the respondent erred (1) in his determination of the value of tangible property paid in for stock at date of its incorporation and thereby reduced its invested capital, and (2) in the computation of the annual deductions from income to which it is entitled on account of depreciation.  FINDINGS OF FACT.  The petitioner*4156  is a Washington corporation with its principal office at Yakima, where, in the taxable years, it was engaged in the cartage and storage business.  It was incorporated June 1, 1919, at which date it issued its stock of the par value of $25,000 in exchange for all the assets of a partnership of similar name theretofore engaged in the same business.  Such stock was issued in equal amounts to J. J. Crawford and William Norton, who had each owned 50 per cent of the capital investment in the prior partnership.  The property acquired for stock consisted of a storage warehouse of brick and concrete construction, erected about 1888 and rebuilt in part about 1900, the land upon which such warehouse was located, and a considerable body of personal property made up of the equipment and teams which the partnership had used in the business.  The parties agree and we find that the worth to the partnership of the land and building so acquired was $11,944.01.  Upon incorporation the petitioner took the assets acquired from the partnership into its books at a value greater than their cost to such partnership.  Upon audit of the income and profits-tax return of the petitioner for the taxable years, *4157  the respondent disallowed the appreciated value of the assets acquired from the partnership in his computation of invested capital, reduced the depreciation deductions from income claimed by the petitioner, and determined the deficiency and overassessment here in question.  In such audit the respondent adopted the cost of the assets in question, as shown on the books of the partnership.  OPINION.  LANSDON: This proceeding involves a reorganization, to which section 331 of the Revenue Act of 1918 applies.  Under the provisions of such section, the petitioner is entitled to take into its assets for invested capital only the cost thereof to the prior owners.  The petitioner has adduced no evidence indicating that this was *246  not done by the respondent.  The evidence adduced is not sufficient upon which to base any finding of fact indicating that respondent erred in the computation of depreciation.  The Board is without jurisdiction as to the years 1920 and 1921, as to which the respondent has asserted no deficiency.  *4158 . Judgment will be entered for the respondent.