dissenting: I believe that this Court, in deciding the instant case, should have followed the two recent decisions of the Court of Appeals for the Second Circuit in Fribourg Navigation Co. v. Commissioner, 335 F. 2d 15, affirming a Memorandum Opinion of this Court; and United States v. Motorlease Corporation, 334 F. 2d 617, reversing 215 F. Supp. 356 (D. Conn.). These cases were decided on the same date (July 15, 1964) by two completely different panels of judges; and the basic issue in each was, in my view, indistinguishable from that here involved.
The two panels, after considering the controlling statutes, the pertinent Income Tax Regulations, and various conflicting judicial views (including those upon which the majority of this Court here relies) each approved the position of the Internal Revenue Service, which was first accepted in 1958 by the Sixth Circuit in Cohn v. United States, 259 F. 2d 371, and Which decision has recently been followed by the District Court for the Eastern District of Tennessee in Killebrew v. United States, 234 F. Supp. 481, (1964), with respect to depreciation on real estate improvements in the year of sale. The basic principle thus approved is, in substance, that a taxpayer may not depreciate property for the year of 'its sale, to a point where the adjusted basis thereof would go below the “salvage value” established by the price for which such property was sold in that year.1
For this Court, almost immediately following the affirmance of our decision in the Fribourg case (see also our decisions in Randolph D. Rouse, 39 T.C. 70; and Edward V. Lane, 37 T.C. 188) and in the absence of any contrary Court of Appeals authority, to now refuse to follow the above basic principle which was applied both by the Sixth Circuit and by both panels of the Second Circuit, is in my view extraordinary to say the least.
Naum, MulRONet, and Scott,//., agree with this dissent.The result In the Fribourg case where the property was sold at a large profit which greatly exceeded the adjusted basis at the beginning of the year was that no depreciation for the year of sale was allowed; and that In the Motorleme case, only a limited amount of depreciation for the year of sale was allowed.