*1008OPINION.
MoRRis:The first issue is with respect to the respondent’s failure to allow a deduction for exhaustion of certain patents in the computation of net income for the years 1924 and 1925.
Section 214(a)(8) of the Revenue Acts of 1924 and 1926 provides that:
(a) In computing net income there should be allowed as deductions:
* :}! * * * *
(8) A reasonable allowance for the exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence.
We have found as a fact that the three patents in question had an aggregate March 1, 1913, value of $120,000, upon which exhaustion may be computed provided the petitioner meets the test prescribed in the section aforesaid.
It is the contention of the respondent that the patents were not used in “ the trade or business ” of the petitioner and, therefore, no *1009exhaustion should be allowed. In so far as Patents Nos. 981,975 and 987,854 are concerned, we believe the respondent is entirely correct. The petitioner was employed by the Pennsylvania Railroad for a number of years as a salaried employee, during which time he, in the discharge of his duties as such employee, invented the tie truck and axle bearing embodied in those two patents. Pursuant to his contract of employment with the railroad company, he retained the ownership of those patents and he executed licenses to his employer, without the payment of royalty. In 1916 the petitioner entered the employ of the Timken Roller Bearing Co. as a salaried employee and, according to his contract of employment with that company, he was expressly prohibited from exploiting his patents. It does not appear from the record that he has ever, at any time, received royalties upon these two patents or that they were ever licensed to anyone except his employer. The mere fact that the patents were used by the corporations with which he was employed does not, in our opinion, constitute use in the petitioner’s trade or business within the meaning of the statute, and, therefore, with respect to those two patents he is not entitled to deduct exhaustion. We entertain a different view, however, with respect to Patent No. 1,024,675, because it appears that the petitioner did grant a license thereon to others than his employer and that he had received therefrom in excess of $100,000 in royalties in the course of several years. We, therefore, are of the opinion that he is entitled to a deduction for exhaustion of this patent based upon the March 1, 1913, value of his one-half interest therein.
The second issue relates to the failure of the respondent to permit a deduction in 1924 of a loss arising from the destruction of an automobile by fire. Section 214(a) (6) of the Revenue Act of 1924 permits the deduction of:
(6) Losses sustained during the taxable year of property not connected with the trade or business * * * if arising from fires, * * * and if not compensated for by insurance or otherwise. * * *
The petitioner testified that he assigned a value' of $800 to this car when it was destroyed and that that value was based upon the fact that a similar car, although not as old, sold for $1,000 a few years previously. The petitioner was asked what a car of this type would have brought in a secondhand market, and he said that, although he had made no investigation his estimate would be somewhere around $600. But, even this figure strikes us as somewhat optimistic. At least we are not willing to accept it as a proper statement of the market value. It is true that he might have found a dealer in automobiles who would have been willing to have allowed him considerably more as a “trade-in value” upon the purchase of *1010a new car, but, we believe, considering all the facts and circumstances, that $250 is a liberal statement of what such a car would have brought upon resale in the open market. Deducting the salvage value of $25 from that value, the petitioner is entitled to deduct a loss of $225 in the computation of net income for 1924.
Reviewed by the Board.
Decision will be entered under Rule 50.