Rieck v. Heiner
| Decision Date | 23 February 1928 |
| Docket Number | No. 3677.,3677. |
| Parties | RIECK v. HEINER, Collector of Internal Revenue. |
| Court | U.S. Court of Appeals — Third Circuit |
James Walton, of Pittsburgh, Pa., for plaintiff in error.
John D. Meyer, U. S. Atty., and W. J. Aiken, Asst. U. S. Atty., both of Pittsburgh, Pa., and A. W. Gregg, F. W. Dewart, and I. R. Blaisdell, all of Washington, D. C., for defendant in error.
Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.
Rieck brought this suit in the District Court to recover amounts exacted as additional taxes for the years 1920 and 1921 under provisions of the Revenue Act of 1918 (40 Stat. 1057, 1096, §§ 202, 212, 215 Comp. St. §§ 6336 1/8 bb, 6336 1/8ff 6336 1/8gg) and the Revenue Act of 1921 (42 Stat. 227, §§ 202, 215 Comp. St. §§ 6336 1/8bb, 6336 1/8gg), respectively. The added taxes grew out of two matters; one, the gain which inured to the taxable from the sale of property he had acquired before March 1, 1913, in computing which he had in each return deducted from the value of the property as of that date a certain amount for depreciation which, later, the Commissioner of Internal Revenue increased and thereby increased the gain and, correspondingly, the tax; the other, a full deduction which the taxable made of premiums for life insurance taken out and used for business purposes which the Commissioner disallowed, thereby raising the taxable net income and increasing the tax.
The case was tried to the court without a jury and on findings of fact informally yet adequately stated in its opinion, the court entered judgment for the defendant-collector. The plaintiff sued out this writ of error and brings here the questions that were tried below.
Since the District Court rendered its decision, the Supreme Court, in United States v. Ludey, 274 U. S. 295, 47 S. Ct. 608, 71 L. Ed. 1054, has set at rest the question of law tried below — whether under the cited revenue acts a gain in the sale of property, required to be included in taxable income of a tax year, is to be determined merely by the difference between cost, or value on March 1, 1913, and the sale price, or by using cost or value on that date as the basis of a calculation into which other factors, and particularly that of depreciation, enter. That court construed the revenue acts prior to the Act of 1924, 43 Stat. 253 () having like provisions and held (in accord with the court below) that in computing the gain from a sale of property a deduction of depreciation during the period of operation shall be made.
Therefore the first question as tried to the court below has been cleared of its legal phases and is now reduced to one of fact, whether the amount the Commissioner deducted for depreciation is right.
The plaintiff, in his tax returns, made deductions for depreciation based on his own estimate of the condition of the properties as reflected by his books. The Commissioner, thinking them too low, computed the depreciation of the property sold in 1920 at 2% per annum and of three properties sold in 1921 at figures varying from 3% to 5% per annum, thereby found greater gains and assessed the additional taxes accordingly. The plaintiff interprets his action as a flat valuation arbitrarily made on the theoretical basis that all properties suffer depreciation in those measures and contends that such valuation is invalid because opposed to the depreciation allowances the plaintiff had made on his books in the regular course...
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...for purposes of section 264(a)(1) that he was not expressly listed on Ms. Lo's policy as the beneficiary thereof. See Rieck v. Heiner, 25 F.2d 453 (3d Cir.1928). Dr. Lo, as opposed to Edward Lo, also stood to gain the most from the plan assets, were Ms. Lo to have died. Whereas Edward Lo ha......
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