This is an appeal from the determination of deficiencies in income tax for the calendar years 1919, 1920, and 1921, in the amounts of $25.90, $4.37, and $44.13, respectively.
Taxpayer alleged in the petition that in computing the gain or loss upon the sale of land and buildings during 1919 the Commissioner computed excessive depreciation of 2 per cent upon the cost and the March 1,1913, value thereof; also that the Commissioner erroneously refused to permit the taxpayer to exhaust over a period of three years the cost during the year 1920 of certain capital additions to a building in order that it might be rented.
FINDINGS OF FACT.
Leonora H. Birdsall, deceased, was a resident and citizen of Brooklyn, N. Y., upon whose death C. H. Birdsall qualified as executor of the estate.
In 1893, Leonora H. Birdsall inherited a one-fourth interest in a brick building erected in 1888 in the business section of St. Joseph, Mo., and in 1902 inherited another one-fourth interest. In 1919, the building and the land upon which it was situated were sold for $80,000. The original cost of the land was $26,000 and the cost of the building, plus improvements made in 1900, was $102,353.54. Upon the latter amount the Commissioner computed depreciation at the rate of 2 per cent per annum and determined that the building had a depreciated value at the time of the sale of $41,886.57, thereby arriving at a depreciated cost of the land and building in 1919 of $67,886.57.
The March 1,1913, value of the land was $29,000 and of the building $127,939. The Commissioner computed depreciation of $14,926.22 at the rate of 2 per cent per annum upon the March 1, 1913, value of the building to the date of sale, resulting in a depreciated value in 1919 based upon the March 1, 1913, value of the land and buildings of $142,012.78. Accordingly, the Commissioner determined that there was no taxable gain or loss upon the sale of the property in 1919. Two per cent per annum was a reasonable allowance for *986exhaustion, wear and tear of the building, which was a six-story and basement building of brick and terra cotta.
In 1920, Leonora H. Birdsall was the owner of a building located at Long Island City, N. Y., which she leased to the Johnson Coin Counting Machine Co., a corporation, for a term of three years. In order to make the building suitable for manufacturing purposes, she removed certain partitions, repaired the floors, rearranged the lighting fixtures and did certain painting and plastering at a total cost of $8,395.02. In her return for the calendar years Í920 and 1921, taxpayer deducted as exhaustion one-third of the cost, of these improvements upon the ground that, upon the termination of the lease of three years, it would be necessary to remove these additions and again remodel the building. Upon audit, the Commissioner disallowed the deduction claimed, allocated $1,195.02 of the total cost of the improvements to repairs, and allowed depreciation at the rate of 2y2 per cent per annum upon the remainder of the cost amounting to $7,200.
DECISION.
The determination of the Commissioner is approved.