*2214 Profit from sale of land, and amount of exhaustion, wear and tear of assets, determined.
*752 Before MARQUETTE, MORRIS, and GREEN.
This appeal is from the determination of a deficiency in income and profits taxes for the years 1920 and 1921, in the amount of $482.25. The questions involved are as to the amount the taxpayer is entitled to deduct in computing its net income for the years 1920 and 1921, on account of the exhaustion, wear and tear of its assets in those years, and as to the amount of profit it realized on the sale of certain real estate.
FINDINGS OF FACT.
The taxpayer is a New Jersey corporation, with its principal office at Paterson.
On May 18, 1920, the taxpayer acquired the assets of a partnership, issuing therefor shares of its own capital stock. Among the assets so acquired were certain automobiles and trucks as follows:
| (1) Federal Truck No. 3 purchased March 4, 1918, at a cost of | $4,978.99 |
| (2) Federal Truck No. 4 purchased June 20, 1918, at a cost of | 4,978.99 |
| (3) Broadway Truck purchased February 28, 1919, at a cost of | 940.00 |
| (4) Federal Truck No. 5 purchased September 30, 1919, at a costof | 5,212.17 |
| (5) Ford Truck No. 2 purchased January 30, 1920, at a cost of | 150.00 |
| (6) Buick purchased June 30, 1920, at a cost of | 1,019.60 |
| (7) White Truck purchased March 31, 1921, at a cost of | 4,841.00 |
*2215 The average life of these automobiles and trucks was four years.
For the period May 18, 1920, to December 31, 1920, the amount of the exhaustion, wear and tear of said automobiles and trucks was *753 $2,668.11, and for the year 1921, the exhaustion, wear and tear thereof was in the amount of $5,038.85.
During the year 1920, the taxpayer acquired 15 lots or parcels of land and issued therefor shares of its capital stock of the par value of $7,000. The lots or parcels of land so acquired were entered on the taxpayer's books at a value of $7,000. In 1921 the taxpayer sold 11 of these lots for a consideration of $9,790. The cost of the 11 lots to the taxpayer in 1920 was $466.66 per lot, making a total cost price of $5,133.26. The taxpayer realized on the sale of these lots in 1921 a profit of $4,656.64. In its income and profits-tax return for the year 1921 it reported its profit from the sale as $6,790.
OPINION.
MARQUETTE: In computing the taxpayer's net income for the year 1920, depreciation on the automobiles and trucks set forth in the findings of fact should be allowed in the amount of $2,668.11. For the year 1921, depreciation should be allowed on said*2216 automobiles and trucks in the amount of $5,038.85; and the profit from the sale of the 11 lots referred to in the findings of fact should be $4,656.64, instead of $6,790, as reported by the taxpayer in its return for that year.
Order of redetermination will be entered on 10 days' notice, under Rule 50.