*689OPINION.
Phillips :It appears that in 1911 and prior thereto the number of liquor licenses which might be issued in the City of Boston was limited by the laws of Massachusetts to not more than 1,000 and that such number might be further limited by the licensing board of the City of Boston in its discretion. This board did limit the number to 984 and refused to issue any larger number. While such licenses were issued annually, expiring on May 1 of each year, it was the established custom of the board to issue such annual licenses to the holders of licenses for the previous year. The holders of any license might transfer it to another, to whom a new license would be issued by the license board, if the purchaser were found to be acceptable by the board. Under such circumstances the holder of such a license had an asset which had a value entirely separate and distinct from the right to conduct the business of a liquor dealer for the remainder of the year for which such license was issued. The' courts have recognized that such value existed and constituted property rights. See Tracy v. Ginzberg, 205 U. S. 170, where the court said:
Because of the large surrender value of old licenses and of the long continued custom of reissuing licenses to old holders until refused for cause, such licenses have been recognized by the courts of Massachusetts as property rights.
In 1911 the petitioner purchased such a license to operate in the City of Boston from one Harding, paying therefor $11,000. The transfer was made to the petitioner in April, 1911, at which time the annual license had less than one month remaining. The petitioner never operated under such annual license but, by reason of its ownership, was enabled to secure the annual license under which he began operations on May 1, 1911. These facts conclusively show that the $11,000 was not paid by the petitioner to Harding for the right to operate during the remaining period which the annual license had to run but was paid in order that the petitioner might be placed in a position where he could thereafter secure annual licenses by payment of the prescribed fee. This intangible right which appertained to the ownership of the annual license continued in the petitioner through 1918 and on March 1 of that year had a value in excess of the amount paid in 1911.
It is the claim of the petitioner that the March 1, 1913, value of his license was $35,000 and that on that date his business had a good will value of $10,000, all of which were destroyed in 1919 as the result of prohibition legislation. He contends that in computing his *690net income for 1919 he is entitled to a deduction of such March 1, 1913, value either under the provisions of section 214(a) (4) or of section 214(a) (8) of the Revenue Act of 1918, which subsections provide for the deduction of:
(4) Losses sustained during the taxable year and not compensated for by insurance or otherwise if incurred in trade or business.
(8) A reasonable allowance for the exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence.
The last-quoted provision of the Act indicates that it is intended to care for losses of capital which took place over a longer period than the taxable year. There is nothing in the record in this case which would indicate that there was any exhaustion, wear and tear, or obsolescence of either the license or the good will prior to the taxable year involved. In fact the testimony here is to the contrary. It all indicates that any loss or damage which was sustained by this petitioner occurred in the year 1919. We therefore conclude that the taxpayer has not brought himself within subparagraph (8) of section 214 of the Act, quoted above.
It does appear, however, that the taxpayer sustained a loss in 1919 which he is entitled to deduct under the provisions of subparagraph (4) of the section of the Act quoted above. The deduction, however, is not measured by the March 1, 1918, value as contended by the petitioner, but is limited to the actual loss sustained. United States v. Flannery, 268 U. S. 98; 5 Am. Fed. Tax Rep. 5373; McCaughn v. Ludington, 268 U. S. 106; 5 Am. Fed. Tax Rep. 5376. The license cost the petitioner $11,000 in 1911. In 1913, it had a value in excess of that amount. In 1919, it became worthless. The taxpayer sustained a loss of $11,000 which is deductible in 1919. The good will, however, appears to have cost the taxpayer nothing and under the decisions quoted there is no deductible loss on account of that item.
Decision will he entered on 15 days'1 notice, under Rule 50.
Considered by Marquette and Milliken.