Hubinger v. Commissioner of Internal Revenue
Decision Date | 02 December 1929 |
Docket Number | No. 19.,19. |
Citation | 36 F.2d 724 |
Parties | HUBINGER v. COMMISSIONER OF INTERNAL REVENUE. |
Court | U.S. Court of Appeals — Second Circuit |
Adrian C. Humphreys and Newton K. Fox, both of Washington, D. C. (Humphreys & Gwinn, of Washington, D. C., of counsel), for appellant.
Sewall Key and John Vaughan Groner, Sp. Asst. Attys. Gen. (C. M. Charest, Gen. Counsel Bureau of Internal Revenue, of Washington, D. C., of counsel), for appellee.
Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
The appellant, in 1920, was the owner of a six-story building in New Haven, Conn., which was rented for business purposes. On February 14, 1920, a fire burned off the tower, the roof, the sixth, and a part of the fifth floors. The lower floors were damaged by smoke and water. After the fire, the appellant spent $70,872.14 in reconditioning the building. The tower was not rebuilt; the same kind of materials were used for reconditioning as were originally in the building. No improvements or betterments were made; some of the damaged floors were covered with linoleum at a somewhat smaller expense than if they had been repaired; and the life of the building was not extended. In fact, it was not in as good condition after the fire as it had been before.
The value of the building in 1913 was $125,000, and prior to the fire was $225,000. It was insured for $29,730, and the insurance collected was expended in reconditioning it.
The appellant contends that he was entitled to a deduction from his gross income of the difference between his expenditures of $70,872.14 and the insurance of $29,730, or $41,142.14, in calculating his income tax.
The Board of Tax Appeals did not allow the deduction claimed, either as a necessary expense or as a loss sustained. There was no definite proof of the salvage value of the building after the fire.
The statutory provisions particularly to be considered are the following:
* * * * * *
"(c) Any amount expended in restoring property or in making good the exhaustion thereof for which an allowance is or has been made. * * *"
Revenue Act of 1918, c. 18, 40 Stat. 1066, 1067.
The following provisions in Treasury Department Regulations 45, articles 49 and 141, are also pertinent:
Section 214(a) (6) specifically covers a case of loss by fire not connected with trade or business, and section 214(a) (4) covers losses, if incurred in trade or business. It is argued that section 214(a) (1) embraces such portion of the restoration after the fire as would ordinarily have been for current expenses had no fire taken place. But we cannot say how far any of the sums paid out to restore the building would have been reasonably necessary had there been no fire, for no basis for a segregation of such items appears in the proof. It is accordingly impossible to allow the appellant anything under section 214(a) (1) as "ordinary and necessary expenses," even if sums of money spent in reconditioning a building after a fire could in any case be regarded as "ordinary and necessary expenses." But such items would seem to be classified by the statute as "losses" under (a) (4) or (a) (6) rather than as "ordinary and necessary expenses" under (a) (1). An attempt to determine what portion of the restitution would have been allowable as a current expense if the restitution had not been directly occasioned by the fire involves a complicated and theoretical calculation at best and seems to be rather in the face of statutory provisions aimed to cover broadly losses by "fires" and other "casualty." It is not necessary to say that a trifling damage such as one occasioned by a fire in a single room...
To continue reading
Request your trial-
Commissioner of Internal Rev. v. Textile Mills S. Corp., 7056.
...2292 (modified); R. I.Gen.Laws (1923) c. 123, §§ 1776-73; S.D.Comp.Laws (1929) §§ 5092-5100; Wis.Stat. (1929) §§ 346.20-26. 5 Hubinger v. Comm., 2 Cir., 36 F.2d 724; Seufert Bros. Co. v. Lucas, 9 Cir., 44 F.2d 528; Lloyd v. Com'r, 7 Cir., 55 F.2d 842; Alexander Sprunt & Son, Inc. v. Com'r, ......
-
P. Dougherty Co. v. Commissioner of Internal Revenue
...on a new roof, Georgia Car & Locomotive Co., 2 B.T.A. 986, or restoring a building, Joseph E. Hubinger, 13 B.T.A. 960, affirmed 2 Cir., 36 F.2d 724. "We sustain the respondent's contention in treating the expenditure of $17,593.32 the same as he treated the expenditure of $15,523.30, i. e.,......
-
Estate of Bryan v. Commissioner
...as here, must be capitalized and the loss on the damaged equipment claimed as an expense. Hubinger v. Commissioner 1 USTC ¶ 441, 36 F. 2d 724 (C. A. 2, 1929), affirming Dec. 4463 13 B. T. A. 960 (1928); Buffalo Union Furnace Co. v. Helvering, 72 F. 2d 399 (C. A. 2, 1934). The only evidence ......
-
Wood v. US, Civ. A. No. 87-775.
...sec. 25.15 (1972 rev.). The distinction is found primarily in the nature and occasion of the expenditure. See Hubinger v. Commissioner, 36 F.2d 724, 726 (2nd Cir.1929), cert. denied, 281 U.S. 741 50 S.Ct. 347, 74 L.Ed. 1155 (1930). For example, in United States v. Winters, 261 F.2d 675 (10t......