Craig v. Commissioner of Internal Revenue, Docket No. 9819.
| Decision Date | 26 March 1928 |
| Docket Number | Docket No. 9819. |
| Citation | 11 BTA 193 |
| Parties | GEORGE L. CRAIG, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Edward B. Scull, Esq., for the petitioner.
V. J. Heffernan, Esq., for the respondent.
This proceeding involves the redetermination of a deficiency in income tax for the year 1921 in the amount of $7,655.38. Petitioner assigns the following errors: (1) That respondent erred in holding that income received by the taxpayer from the estate of Joseph W. Craig, deceased, is taxable to him instead of the fiduciary; (2) the respondent erred in using as a basis of depreciation value of buildings which was less than their fair value on March 1, 1913; and (3) that respondent erred in his refusal to allow as a deduction, $6,667, given to Sewickley Cemetery by petitioner in the year 1921, and which was claimed by petitioner in his income-tax return for that year as a proper deduction. The facts were stipulated and our findings of fact conform to the stipulation of the parties.
FINDINGS OF FACT.
Petitioner is a citizen of the United States, residing at 849 Bank Street, Sewickley, Pa. The facts relating to the first issue, namely, that respondent erred in holding that income received by the taxpayer from the estate of Joseph W. Craig for the year 1921, was taxable to him instead of the estate, have heretofore been considered by the Board and are fully set forth in the findings of fact in George L. Craig et al. v. Commissioner, 7 B. T. A. 504. The facts found by the Board in that appeal with reference to this issue are made a part of these findings of fact as fully as if set forth in detail herein. The conditions existing in 1921, with reference to such income, were identical with those existing in 1918, 1919 and 1920.
In computing the income from the real estate owned by the petitioner as devisee of Joseph W. Craig, the respondent computed depreciation on buildings on said real estate based upon a value on March 1, 1913, as follows:
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| Value on | Rate of
Character of buildings | Mar. 1, | depreciation
| 1913 |
-------------------------------------------------------|------------|--------------
| | Per cent
Brick rental properties ______________________________ | $246,800 | 2
Brick warehouse ______________________________________ | 25,000 | 1
Frame rental properties ______________________________ | 14,350 | 3
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Whereas, the correct basis for March 1, 1913, value of buildings for depreciation should be:
Brick rental properties ____________________ $350,042.50
Brick warehouse ____________________________ 36,080.00
Frame rental properties ____________________ 32,692.00
Joseph W. Craig, a citizen of the United States, a resident of the Borough of Sewickley, County of Allegheny, Commonwealth of Pennsylvania, died on March 5, 1912, having on June 20, 1911, made his last will and testament. The said last will and testament of Joseph W. Craig was admitted to probate in the Orphans' Court of the County of Allegheny, Commonwealth of Pennsylvania, on the 15th day of March, 1912, and Edwin S. Craig and George L. Craig were appointed executors of the said last will and testament, having been named in the will as said executors.
By the terms of the will of Joseph W. Craig, all of his residuary estate was devised and bequeathed to his four brothers and two sisters, share and share alike, one of whom is the petitioner herein.
The property of Joseph W. Craig included, in addition to personal property, some thirty separate properties varying widely in character, use and value.
The fair value on March 1, 1913, of the lands and buildings owned by Joseph W. Craig at the time of his death, was as follows:
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Location of property | Value of | Value of | Total value
| land | buildings |
--------------------------------------------------------------------|------------|------------|--------------
1319 Pennsylvania Avenue, Pittsburgh1 ________________________ | $8,820.00 | $1,112.50 | $9,932.50
2421 Pennsylvania Avenue, Pittsburgh1 ________________________ | 4,200.00 | 800.00 | 5,000.00
510-512 Federal Street, Pittsburgh1 __________________________ | 44,000.00 | 5,439.00 | 49,439.00
208 Smithfield Street, Pittsburgh1 ___________________________ | 79,100.00 | 6,500.00 | 85,600.00
Third Avenue, Pittsburgh1 ____________________________________ | 85,440.00 | 12,791.00 | 98,231.00
1633-39 Pennsylvania Avenue, Pittsburgh1 _____________________ | 25,250.00 | 3,000.00 | 228,250.00
46 and 48 Eighteenth Street, Pittsburgh1 _____________________ | 19,200.00 | 19,200.00 | 138,400.00
Twentieth and Pennsylvania Avenues, Pittsburgh1 ______________ | 18,000.00 | 5,544.00 | 23,544.00
2017 Pennsylvania Avenue, Pittsburgh1 ________________________ | 7,200.00 | 800.00 | 8,000.00
2025-31 Pennsylvania Avenue, Pittsburgh1 _____________________ | 28,800.00 | 3,740.00 | 32,540.00
208 East Stockton Avenue, Pittsburgh1 ________________________ | 14,400.00 | 7,566.00 | 21,966.00
416-18 Federal Street, Pittsburgh1 ___________________________ | 72,000.00 | 6,264.00 | 78,264.00
Federal and Montgomery Streets, Pittsburgh1 __________________ | 48,400.00 | 14,880.00 | 63,280.00
926 Western Avenue, Pittsburgh1 ______________________________ | 4,650.00 | 3,500.00 | 38,150.00
806 Pennsylvania Avenue, Pittsburgh4 _________________________ | 60,000.00 | 36,080.00 | 96,080.00
Chestnut Street, Pittsburgh5 _________________________________ | 3,580.00 | 10,456.00 | 14,036.00
Staunton farm5 _______________________________________________ | 22,000.00 | 14,286.00 | 36,286.00
M. K. farm5 __________________________________________________ | 2,300.00 | 500.00 | 2,800.00
Purdy farm5 __________________________________________________ | 18,200.00 | 2,000.00 | 20,200.00
McPherson farm5 ______________________________________________ | 8,940.00 | 2,250.00 | 11,190.00
J. R. Brown farm5 ____________________________________________ | 3,150.00 | 700.00 | 3,850.00
Stevenson farm5 ______________________________________________ | 18,410.00 | 2,500.00 | 20,910.00
Elliott farm5 ________________________________________________ | 3,500.00 | __________ | 3,500.00
Homestead of Joseph W. Craig6 ________________________________ | 15,960.00 | 11,880.00 | 27,840.00
Thirteenth and Pike Streets, Pittsburgh1 _____________________ | 80,000.00 | 87,000.00 | 167,000.00
Eighteenth and Pike Streets, Pittsburgh1 _____________________ | 52,944.00 | 41,294.00 | 94,238.00
Twentieth and Pike Streets, Pittsburgh1 ______________________ | 72,000.00 | 108,000.00 | 180,000.00
Twenty-first and Pike Streets, Pittsburgh1 ___________________ | 54,720.00 | 98,496.00 | 7153,216.00
Staunton property, Pittsburgh1 _______________________________ | 10,800.00 | 45,312.00 | 56,112.00
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The items of gross income in controversy in this appeal are exclusively income from the real estate owned by petitioner as devisee of Joseph W. Craig and enumerated in the preceding paragraph hereof; and the depreciation deduction in controversy is claimed with reference to buildings located on that real estate.
"Sewickley Cemetery" is a corporation having its domicile in the Borough of Sewickley, Allegheny County, Pennsylvania, and was incorporated by an Act of Assembly of the Commonwealth of Pennsylvania approved April 11, 1859. Pertinent parts of that Act read:
Section 1. BE IT ENACTED by the Senate and House of Representatives, of the Commonwealth of Pennsylvania in General Assembly met, and it is hereby enacted by the authority of the same, that G. E. Warner, Dr. John Dickson * * *, be and they and their successors are hereby created a body politic and corporate in law under the name and title of the Sewickley Cemetery, and by that name shall have perpetual succession, and be able and capable in law to have and use a common seal, to sue and be sued, implead and be impleaded, in all Courts of law and equity, and to do all such other things as are incident to a corporation.
Section 2. That the said corporation shall, at least once in every year hereafter, fill by election by ballot, all vacancies which may occur, and may at the same time or other times, increase and add to their number from those who may be lot holders in the cemetery, so that the said company shall never be reduced to less than ten, nor exceed thirty members; and they shall have full power to ordain, establish and put in execution all such by-laws, rules and regulations, not contrary to the Constitution and laws of the United States or of this State, which may be necessary for the proper government of this corporation, its officers and affairs, and, until the election of managers shall exercise all the powers thereof.
Section 4. That the said corporators' managers shall have power to receive all and singular such gifts, bequests and donations of property as may be made, and to use the same for the benefit of the corporation; to contract for and purchase from the owner or owners thereof a tract of land in Allegheny County not exceeding in the whole fifty acres, and the...
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...their operations are controlled. The courts of the state are given the authority to enforce the restrictions of the statute. Craig v. Commissioner, 11 BTA 193, 200, has been noted in support of the disallowance of the claimed deduction. In that case the Tax Court stated: "from the first rev......