Manhattan Brewing Co. v. Commissioner

Sterniiagen,

dissenting: Try as I have, out of respect for the considered opinion of a majority of the Board, to bring my mind to accord with the prevailing views, I can not see that obsolescence of tangibles has been established by the facts found. The plant was, by reason of the sweep of prohibition, less useful at the end of the year 19.18 than at the beginning and seemingly less valuable. But even assuming that the asserted reduction in value could be as accurately measured as the petitioner contends, this is not the way to measure the allowance for obsolescence which the statute provides for. Such allowance is the spreading of an expected obsoleteness reasonably over .a period in which such obsoleteness can be foreseen, and it is applied by supplementing the allowance for depreciation in cases where the economic life is, by reason of this obsoleteness, reasonably demonstrated to be less than" the physical life or legal duration of the property, In.the presentíase, there was'in 1918 *964no knowledge as to wbat use could be made of tlie property and it was not until 1919 that an investigation was begun to find out, and this brought forth the unaccepted bids for salvaging. Later another corporation was organized to take over the property for a new operation. However unsatisfactory this turned out to be, I can not see how it serves to prove the claimed obsolescence of $255,-488.56 in 1918. It seems almost unnecessary to say that in my opinion an allowance for obsolescence may be deducted when by evidence the forthcoming obsoleteness can be reasonably proved and its effect reasonably established, or that a loss may be deducted in a proper case when the property is abandoned, sold or otherwise disposed of, or its worthlessness proved. But the present case is not one of demonstrated loss and the facts do not, in my opinion, support the allowance claimed for obsolescence.

MuRDOCK concurs in the above dissent.