*3381 In determining gain or loss upon the sale of depreciable property due allowance must be made for depreciation sustained in prior years, whether or not such depreciation has been recovered by deductions therefor.
*883 This proceeding results from the determination of a deficiency in income tax for the calendar year 1922, in the amount of $237.05. The deficiency in question arises by reason of the addition by the Commissioner to the selling price of certain buildings of the sum of $1,896.34 for depreciation, which had not been taken by petitioner in any income-tax return during the ownership of the property by petitioner.
*884 FINDINGS OF FACT.
During the year 1918, petitioner acquired a brick dwelling house, paying therefor a consideration of $27,090.69, and during the year 1922, sold the same for $32,071.64. In its return filed for the year 1922, petitioner reported the difference between the sales price and purchase price, or the sum of $4,980.95, as income for the year. Between the dates of purchase and sale, the petitioner made no deduction*3382 for depreciation sustained on account of such building in any income-tax return filed for any years included in or forming a part of such period and during the said year there was no net income of the petitioner from which depreciation, if sustained, could have been deducted. Upon the examination of the income-tax return of petitioner for the year 1922, the respondent increased the net income reported from the sale by the sum of $1,896.34, representing depreciation claimed by the respondent to have been sustained upon said building at a rate of 2 per cent per annum for three and one-half years, being the period such property was held by petitioner. Based upon such understatement of income, the respondent has computed the deficiency for the calendar year 1922 in the amount of $237.05.
OPINION.
MILLIKEN: The question raised by the petitioner has previously been considered by us and decided adversely to petitioner's contention. In determining gain or loss upon the sale of depreciable property, due allowance must be made for depreciation, whether or not deductions therefor have been taken by the taxpayer in prior years. *3383 ; ; ; ; .
Judgment will be entered for the respondent.