*1230 Before JAMES, LITTLETON, SMITH, and TRUSSELL.
This appeal is from determinations of deficiencies in income and profits tax for the fiscal years ending November 30, 1918, 1919, and 1920, in the amounts of $3,316.82, $6,686.28, and $5,818.26, respectively. The total tax in controversy is less than $10,000. The taxpayer alleged that the Commissioner erred in refusing (1) to allow accelerated depreciation and obsolescence of machinery and equipment, and (2) to redetermine its rent account and allow a deduction for rent of approximately $8,000 in excess of the amount paid or incurred and allowed as deductions in each of the years.
FINDINGS OF FACT.
Taxpayer is a Pennsylvania corporation with principal office at Philadelphia, engaged in the manufacture of vehicle springs.
At the inception of the corporation in 1904 the production was principally wagon springs, but during the period under review the production was principally motor-vehicle springs. The transition of the business from wagon spring to motor-vehicle spring production was very gradual, and at the*2131 end of 1920 some wagon springs *1231 were still being manufactured. The machinery acquired in 1904 was being operated in 1918, 1919, and 1920, and it was not until 1920 that the taxpayer began to improve the machinery by additions and replacements. There was an increase each year in the number of tons per year production. Due to technical construction the machine work per pound of motor-vehicle springs was greater than the machine work per pound of wagon springs.
The partnership of Matlack, Taylor & Kensil owned 80 per cent of the outstanding capital stock of the taxpayer. This partnership also owned certain land, buildings, and a power plant centrally located in the business district of Philadelphia, which it leased to the taxpayer for use in carrying on its business. The rental paid by the taxpayer for this property during the years 1915 to 1920, inclusive, follows:
| 1915 | $3,627.96 |
| 1916 | 3,627.96 |
| 1917 | 3,627.96 |
| 1918 | 3,864.66 |
| 1919 | 3,900.00 |
| 1920 | 3,900.00 |
The lease of the premises expired February 1, 1918, and the partnership again leased the same to taxpayer at an annual rental which was $272.04 in excess of annual rental paid under the previous*2132 lease.
DECISION.
The determination of the Commissioner is approved.