dissenting: I dissent from so much of the opinion in this case as denies to the taxpayer any deduction for the exhaustion of Patents Nos. 981,975 and 987,854 upon the ground that they were not “ used in the trade or business ” of the petitioner. The respondent disallowed the deduction of any amounts for exhaustion of the patents “ for the reason that no valuation or cost of said patents has been furnished ” as stated in the deficiency notice. The petitioner testified upon this point as ‘follows:
Now, the inference might be drawn as to why I have not made any effort to sell these patents personally. Some effort was made shortly after I went with Timken. I thought it would be an excellent time now to capitalize on some of these patents X had developed while I was in the employ of the I-'enn-sylvania Railroad, but I soon ran up against this proposition. One of the executives of a large truck company whom I approached in connection with the use of a patent not confined to the bearings which he could use very well on his motor trucks, and he stated something on this order; he says: “ You must hot think for an instant that you can come in here and expect to exact a royalty from me on account of the use of a radiator patent, when I am paying your company, who is employing you, twenty five dollars for each truck for bearings.” Well, I recognized that was an extremely forceful argument, and after giving it due consideration over a considerable period of time, and talking it over with our other executives, I found that it was impracticable— utterly impracticable for me to attempt to capitalize these patents, but rather that I should use them to extend the Timken Company’s business. We have not made any direct contracts with customers, but they have been led to understand that any use that they wish to make of patents covered by my patents could be made, as long as they used Timken bearings in their product. I am quite convinced that except for that condition, I would be in a position to realize quite handsomely on these various patents and would have well reached the figures that have been brought out in today’s hearing.
Q. Have you indirectly profited from the utilization of these patented inventions by other companies?
A. Yes, I have indirectly profited, in addition to a salary the company pays me, they have been in the habit for some ten years or thereabouts of granting a bonus at the termination of the year, which is a substantial percentage of the salary, which I am given to understand covers all of the intangible tilings, such as the use of patents, entertainment, membership in clubs that I do not use personally, but which I keep up for the entertainment of customers. * * *
What was petitioner’s trade or business in 1924 and 1925 ? Clearly, be was engaged as an officer of the Timken Roller Bearing Co. He *1011had made a name for himself as an inventor and was valuable to his employer by reason of the patents which he controlled. His position and at least a portion of his compensation was directly attributable to these patents. If the petitioner had been engaged in no business in 1924 and 1925, but had simply received royalties upon his inventions, I think he would be entitled to a deduction for the exhaustion of them. His income was in part derived from them. I can not see how it was any less derived from them when employed in the manner in which the petitioner was employed.
Love and Seawell agree with this dissent.