APPEAL OF BEADLESTON & WOERZ, INC., Docket No. 6033.

• Citation: 5 BTA 165
• Decision Date: 21 October 1926
• Docket Number: Docket No. 6033.
• Parties: APPEAL OF BEADLESTON & WOERZ, INC.
• Court: U.S. Board of Tax Appeals

5 B.T.A. 165 (1926)

APPEAL OF BEADLESTON & WOERZ, INC.

Docket No. 6033.

Board of Tax Appeals.

Decided October 21, 1926.

William J. Hughes, Jr., Esq., and Louis Malthaner, Esq., for the petitioner.

Arthur H. Murray, Esq., and James T. Dortch, Esq., for the Commissioner.

This appeal is from the determination of a deficiency of $4,901.73 for the year 1919, arising from the disallowance of depreciation of $24,295.26, claimed on buildings, and $40,689.57, representing one-half of the alleged loss on bottles used in the business. The petition was amended at the hearing and is now based on the Commissioner's refusal to allow a deduction of $5,585.04 on account of deposits made with the taxpayer by purchasers of bottled goods to secure the return of the bottles, and $121,712.87 for the complete loss of a building erected for the storage of lager beer for fermentation.

FINDINGS OF FACT.

1. Prior to the adoption of war-time prohibition, the taxpayer was engaged in the manufacture and sale of lager beer, ales, porter and ice. After the adoption of the National Prohibition Amendment it gave up the manufacture of intoxicants and engaged during 1919 in the manufacture and sale of near beer. Finding this unprofitable, it abandoned entirely the manufacture of drinks. It now has but two employees — a manager, who is an invalid, and a bookkeeper.

2. The appeal, as originally stated, was from the disallowance of the following deductions claimed by the taxpayer:

                  Depreciation of building, etc., at 291 — 10th St., Borough
                    of Manhattan ___________________________________ $24,295.26
                  Loss on bottles (inventory) ______________________  40,689.57
                

Taxpayer, by its amended petition, abandoned both of these claims and submitted a claim for deductions on account of deposits for return of bottles and obsolescence of the fermentation building.

3. The building in question was erected some 36 years ago. All records as to its cost have been destroyed or lost. It was built for the sole purpose of storing the beer manufactured by the company during fermentation. It is a five-story and basement brick building, 68 feet, 8 inches, by 89 feet, 4 inches, having concrete floors, supported by very substantial steel pillars. The height of the basement was about 15 feet, that of the first story about 25 feet, of the second story about 20 feet, and of the other three about 15 feet each. Within the building, some on each floor, were 23 vats having a capacity of from 200 to 350 barrels each. Some of these were of wood, but the large ones were steel glass-lined tanks or casks. The building is lighted electrically and has only about a dozen windows. It has a complete refrigerating system for keeping the beer cool.

4. On July 1, 1913, an appraisal company made a survey and inventory of 35 buildings and of the equipment therein owned by the petitioner, and...