*3465 1. A member of a partnership is taxable upon his distributive share of partnership income whether distributed or not.
2. Depreciation allowed by the Commissioner on the law library of petitioner sustained.
3. Amount paid to petitioner annually for maintenance of law library used by partnership but title to which was in petitioner properly held to be income to him.
*725 This is a proceeding for the redetermination of deficiencies in income taxes for the years 1920 to 1922, inclusive, in the total amount of $1,142.44, as follows:
| Deficiency | |
| Year 1920 | $637.14 |
| Year 1921 | 302.69 |
| Year 1922 | 202.61 |
| 1,142.44 |
*726 The issues are (1) whether the Commissioner erred in including in the petitioner's income, his distributable portion of the income of the law partnership of which he was a member; (2) whether the Commissioner erred in not allowing the petitioner a greater deduction for depreciation on law books; and (3) whether the Commissioner erred in including in petitioner's net income $1,200 for each of the years involved, representing*3466 sums received by petitioner from the aforesaid law partnership for the alleged purpose of maintaining a law library.
FINDINGS OF FACT.
The petitioner is a resident of the City of Tulsa, Okla., and during the years 1920, 1921, and 1922, he was a member of the law firm of West, Sherman, Davidson and Moore of that city. His receipts from the firm constituted practically his entire income, with the exception of a few minor items, which are given in his tax returns for the years in question. The petitioner used the cash basis in making his personal returns.
The books of the partnership were kept on a cash basis. Whenever money was paid to the firm it was put in the firm's bank account. From month to month as the money was accumulated, distributions were made in accordance with the members' interests in the partnership. A fund of a thousand or two thousand dollars was kept on hand all the time for the purpose of handling the business. Reimbursement was made to the individual members from time to time for money expended by them for traveling and other expenses, which were kept track of by personal accounts with the firm. The only share of the profits that was paid to any member*3467 of the firm was by way of the distribution checks each month, and the petitioner returned in his tax return exactly what he received in this way as distributions from the firm.
Two members of the firm, West and Sherman had a large library which belonged to them individually, but which was used by the members of the firm, and on account of which the firm allowed them $1,200 each, a year, which was paid to them in monthly checks of $100. This item was treated by the firm as an expense. It was not considered when the computation for purposes of distribution was made, but was deducted from the money available for apportionment and *727 the distribution was made from the balance. A substantial part of the $1,200 was expended each year by West for replacements and additions to the library, but he never kept a very accurate account of such expenditures. He and Sherman first began acquiring the library about 20 years ago.
On his return for 1920 the petitioner deducted $500, representing alleged depreciation on his library. It does not appear that any deduction for depreciation was taken in 1921, but for 1922, a deduction of $1,000 was taken on account of depreciation on petitioner's*3468 law library and residence in Tulsa.
OPINION.
MURDOCK: Sections 218(a) of the Revenue Acts of 1918 and 1921, provide that
* * * There shall be included in computing the net income of each partner his distributive share, whether distributed or not, of the net income of the partnership for the taxable year, * * *
The petitioner herein reported only the amount of money actually distributed to him by the partnership in any given year, and not, as provided by the Revenue Acts, his distributive share of the net income of the partnership. He stated on the witness stand that it might so happen that a large amount of money would be received by the firm just at the end of the year, which would not be distributed until the succeeding year. In that case he would report his share in the year in which it was distributed to him. It is clear that the petitioner did not report his income as required by law, and that the Commissioner correctly determined that the petitioner was taxable on his distributable share of partnership income, whether distributed or not. *3469 .
With respect to the proper amount of depreciation to be allowed the petitioner on his law library, West stated that he and Sherman first began acquiring the library about 20 years ago. He did not know how much of the library was acquired in any particular year, but stated that probably two-thirds of the present library was acquired before March 1, 1913. He also stated that there was approximately $30,000 worth of books in the library, about one-half of which belonged to Sherman, the rest belonging to him. There is no evidence as to the useful life of the books, although West stated that all of the books that had been acquired through the years, with the exception of certain textbooks and annual digests, are still in use. Obviously, from the evidence we are unable to determine what would be a proper allowance for depreciation, and the determination of the Commissioner in this respect is therefore approved.
*728 There is no question but that a part, at least, of the $1,200 per annum received by the petitioner from his firm for the purpose of purchasing books for his law library was income to him. "Gross income" is defined in*3470 the Revenue Acts of 1918 and 1921, as including "income derived from any source whatever." If, on the other hand, the petitioner was entitled to deduct from this income any expenses in maintaining the library, we are unable to determine the amount of any such expenses from the evidence and the action of the Commissioner in this respect is therefore approved.
Judgment will be entered for the respondent.