Norwood, Calef & Co. v. Commissioner

*262OPINION.

Trammell:

The taxpayer did not claim on its 1918 return a deduction for the exhaustion of its patents because it had taken what it considered a sufficient deduction in 1917 to cover both 1917 and 1918. It acted on the assumption that the deduction claimed in its 1917 return would be allowed. The disallowance of such an amount for 1917 as was in excess of depreciation on a straight line basis put the taxpayer in an entirely different situation. Such disallowance, after its 1918 return had been filed, left the taxpayer with no allowance in that return for a deduction on account of the exhaustion of its patents which it had sustained during that year. The taxpayer clearly recognized that its patents were subject to exhaus*263tion as Indicated by the fact that it charged off an amount in 1917 which it considered sufficient for that year as well as for 1918.

The principle contended for by the Commissioner that a taxpayer has an option to take a deduction on account of the exhaustion of patents which must be exercised at the time of the filing of the original return, is not involved in this case for the reason that such rule, if it exists, can not apply to a situation in which the Commissioner by his own act of disallowance in one year has caused the taxpayer to make the claim in a subsequent year.