*2827 A reasonable allowance during 1920 and 1921 for the exhaustion, wear and tear, including obsolescence of petitioner's hotel building, found to be an amount computed at 2 per cent on the structural cost thereof.
*587 The Commissioner determined deficiencies in income and profits tax of $56,091.57 for 1920 and $50,754.83 for 1921. Only so much of *588 the deficiencies is in controversy as results from the Commissioner's allowance for depreciation and obsolescence at the rate of 2 per cent per annum instead of 3 1/2 per cent claimed by the petitioner.
FINDINGS OF FACT.
Petitioner is a Pennsylvania corporation with office at Pittsburgh. Through its ownership of the stock of the William Penn Hotel Co., the Fort Pitt Hotel Co. and the Hotel Service Co. during a portion of the year 1920 it controlled the operations of said companies and filed a consolidated return for the year 1920. In 1920 the assets of the William Penn Hotel Co. were transferred to petitioner upon the surrender by petitioner of all the capital stock*2828 of the William Penn Hotel Co., and thereafter the William Penn Hotel Co. surrendered its charter. The William Penn Hotel is a fire-proof building of brick, stone, and concrete construction. The structural cost of the building, which was completed and opened to the public in March, 1916, was $2,378,822.09. It is located in Pittsburgh, Pa., fronting 216 feet on William Penn Way and running 130 feet along Oliver Avenue and a corresponding length on Sixth Avenue. It is 19 stories above ground and 3 stories under ground. It is 265 feet high, contains 6 passenger elevators and 4 freight elevators, which run from the basement to the seventeenth floor. The average height of the guest rooms is 9 feet. The lobby, 25 feet in height, occupies approximately 8,000 square feet; the largest main dining room is 23 1/2 feet high and occupies 4,000 square feet; the second main dining room, 13 1/2 feet high, occupies 2,080 square feet; the main ballroom, 30 1/2 feet high, occupies approximately 5,750 square feet. The total ground space of the hotel is approximately 27,300 square feet. The building is not constructed for the use of any part of the ground floor for stores. The entire building*2829 in 1919 was used for hotel purposes.
The part of the building on which the 3 1/2 per cent rate of depreciation is claimed consists of the foundations, framework, walls, roof, floors, trimming, inside stairways of steel and reinforced concrete, and other fixtures, exclusive of plumbing fixtures, heating and ventilating systems, electric wiring, elevators, lighting fixtures, tile floors, and elevator machinery, the depreciation in which has been allowed at a higher rate and is not here at issue. Prior to 1919 the petitioner claimed depreciation at the rate of 2 per cent and the same was allowed.
The reasonable allowance for the taxable years for the exhaustion, wear and tear, including a reasonable allowance for obsolescence of the building, is 2 per cent on the structural cost of $2,378,822.09.
*589 OPINION.
LITTLETON: This proceeding was submitted upon the record made in the Court of Claims of the United States in the case of , involving the year 1919. Petitioner's evidence consists of the testimony of eight witnesses; two were connected with hotels in New York City, one was employed by*2830 a hotel in Washington, D.C., having formerly worked for a hotel in Pittsburgh, Pa., three were interested in or employed by hotels in Pittsburgh, Pa., and two who were not engaged in the hotel business but who were certified public accountants. Some of these witnesses were familiar with the William Penn Hotel Building in Pittsburgh. Each witness gave as his opinion that the allowance for exhaustion, wear and tear, and obsolescence of the William Penn Hotel Building for the taxable year should be computed at a rate of not less than 3 1/2 per cent per annum. These opinions are not conclusive upon the Board. ; ; ; .
The Commissioner introduced two witnesses who testified in his behalf before the Court of Claims and in substance stated the allowance customarily made by the Commissioner for depreciation of buildings of the character and construction of the William Penn Hotel Building is 2 per cent per annum. The testimony of these witnesses adds no weight to the prima*2831 facie correctness of the Commissioner's determination.
After due consideration of the evidence submitted, the Board is of the opinion that 2 per cent per annum computed upon the agreed construction cost of the petitioner's hotel building is a reasonable allowance for the exhaustion, wear and tear, including obsolescence thereof, during the taxable years 1920 and 1921.
Judgment will be entered for the respondent.