*2432 The evidence herein held insufficient to establish the rates and basis for depreciation claimed by the taxpayer.
*1303 Before MARQUETTE, MORRIS, GREEN, and LOVE.
This appeal is from the determination of a deficiency in income and profits tax for the years 1920 and 1921, in the aggregate sum *1304 of $5,913.73. The deficiency arose from the action of the Commissioner in increasing the rate of depreciation taken by the taxpayer for the period prior to the taxable years, resulting in a decrease of invested capital for the taxable years in question.
FINDINGS OF FACT.
The taxpayer is an Illinois corporation with its principal place of business at Chicago. It was engaged in the business of operating a large laundry and had been so engaged for over thirty years. Its assets consisted of the usual plant and equipment of a large modern laundry, all of which was kept in good repair.
A summarized inventory of the assets as of December 31, 1912, as shown upon the books of the taxpayer, is as follows:
| Power machinery | $3,198.75 | |
| Depreciated | 200.00 | |
| $2,998.75 | ||
| Machinery, wash room, first floor | 7,622.05 | |
| Depreciated | 200.00 | |
| 7,422.05 | ||
| Machinery, second floor | 4,564.06 | |
| Depreciated | 200.00 | |
| 4,364.06 | ||
| Machinery, third floor | 6,066.63 | |
| Depreciated | 200.00 | |
| 5,866.63 | ||
| Ventilating system | 355.75 | |
| Shafting and pulley | 977.50 | |
| Belting | 642.71 | |
| 22,627.45 | ||
| Baskets and wooden trucks | 862.39 | |
| Less 25 per cent | 215.60 | |
| 646.79 | ||
| Boiler-room tools, etc | 44.60 | |
| Carpenter tools | 6.75 | |
| Engineers' tools, etc | 243.55 | |
| Ironing room spec | 273.41 | |
| Less | 41.01 | |
| 232.40 | ||
| Wash-room furniture | 377.00 | |
| Steam-heating system | 2,811.90 | |
| Depreciation | 100.00 | |
| 2,711.90 | ||
| Water system | 3,107.06 | |
| Depreciation | 100.00 | |
| 3,007.06 | ||
| Gas system | 700.09 | |
| Carpentry, lumber, etc | 1,918.35 | |
| Main office and laundry furnishings | 2,296.26 | |
| Less 15 per cent | 344.39 | |
| 1,951.87 | ||
| Insurance account | 818.05 | |
| Signs | 261.35 | |
| Gold and white letters | $52.20 | |
| Books, stationery, etc | 630.90 | |
| Engineers' supplies | 162.43 | |
| Horses | 2,785.00 | |
| Barn supplies | 481.73 | |
| Wagons | $2,718.50 | |
| Harness | 318.00 | |
| Miscellaneous supplies (itemized inventory) | 811.60 | |
| 3,848.10 | ||
| 43,507.68 |
*2433 *1305 The principal assets had been acquired a number of years prior to the date of the above inventory, but were carried at cost. Some of the assets, as indicated in the above inventory, were depreciated to some extent on December 31, 1912. The taxpayer identified one certain flat-work ironer, the original cost of which in 1904 was $2,600 and was carried on the said 1912 inventory at $2,340, which ironer was turned in on a new ironer at a valuation of $2,000 after 22 years' service. One certain collar ironer and a metal washer had a life of 25 years. Certain shirt ironers, after 21, years' usage, were still in service. Some of the office furniture and fixtures had been in service 30 years and were still in use. The usual life of its Ford trucks was four years, but four of them were still in use after a four-year usage. One G.M.C. truck purchased in 1916 was still in operation. Some of the wagons and horses had lasted 12 to 15 years. There was no evidence of the life of the remaining assets.
The taxpayer claims that the 1912 list of values should be accepted as the March 1, 1913, value upon which depreciation should be based, and depreciation taken down to 1920*2434 at the following rates:
| Per cent. | |
| Laundry machinery and equipment | 6 2/3 |
| Power equipment | 5 |
| Furniture and fixtures | 5 |
| Automobile and delivery equipment | 20 |
For the taxable years, the taxpayer claims depreciation at the following rates:
| 1920 | 1921 | |
| Power machinery | 14 | 11 |
| Laundry machinery | 10 | 9 |
| Delivery equipment | 27 | 14 |
| Office equipment | 10 | 10 |
The Commissioner allowed depreciation for the taxable years, as well as prior years, as follows:
| Per cent. | |
| Laundry machinery, including power equipment | 10 |
| Furniture and fixtures | 10 |
| Horses, wagons, and harness | 15 |
| Automobiles | 25 |
*1306 OPINION.
LOVE: In this appeal the taxpayer seeks a low rate of depreciation for the period prior to the taxable years 1920 and 1921, while for these latter years it claimed in its tax returns a much higher rate. The evidence is insufficient to establish the rates or the basis of depreciation claimed by the taxpayer. Although the taxpayer was able to prove that a few of its machines had a longer life than that attributed to them by the Commissioner, there is a total failure of proof as to the remainder of the machinery and*2435 other assets. Furthermore, the testimony is strikingly inconsistent with the rates of depreciation claimed by the taxpayer for the same class of assets in the years 1920 and 1921.
The deficiencies are $2,559.43 for 1920 and $3,354.30 for 1921. Order will be entered accordingly.