Bradt Drug Co. v. Commissioner , 4 B.T.A. 36 ( 1926 )

APPEAL OF BRADT DRUG CO.

Bradt Drug Co. v. Commissioner

Docket No. 6676.

United States Board of Tax Appeals

4 B.T.A. 36; 1926 BTA LEXIS 2403;

April 21, 1926, Decided Submitted February 24, 1926.

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John D. Foley, Esq., for the Commissioner.

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Before JAMES, LITTLETON, SMITH, and TRUSSELL.

This is an appeal from the determination of a deficiency of $1,427.76 for the calendar year 1921.

FINDINGS OF FACT.

The taxpayer is a New York corporation with principal office at Albany. In his answer to taxpayer's petition, the Commissioner admitted the allegations of fact contained therein as follows:

The taxpayer corporation was organized March 7, 1917, with an authorized capital stock of $10,000.00, all of which was outstanding at the beginning of the taxable year. In 1921 this organization was increased to $60,000.00. The increase in capital stock was issued to Mr. Warren L. Bradt for a leasehold owned by him. The lease was acquired upon a building for the purpose of conducting a retail drug business. This lease had a life of twenty years from January 1, 1920 to December 31, 1939, on a rental basis as follows:

1920 to 1925	$12,000.00 per annum.
1925 to 1930	$13,000.00 per annum.
1930 to 1940	$14,000.00 per annum.

The taxpayer corporation in making its return for the year 1921 claimed as a deduction from income 7/12 of 1/19, (one year of the lease having expired) of $50,000.00 as amortization.

The Revenue Agent disallowed this deduction on account of amortization of the leasehold. Later under date of November 10, 1924, the taxpayer received a letter from the Income Tax Unit also disallowing the deduction on account of amortization of the leasehold. This action on the part of the Income Tax Unit was protested by the taxpayer but the Income Tax Unit still held that the taxpayer was not entitled to this deduction.

Upon audit of the return for 1921 the Commissioner denied the taxpayer's claim for a deduction for exhaustion based upon a value for the lease of $50,000.

The deficiency is $1,427.76. Order will be entered accordingly.