Williamson Veneer Co. v. COMMISSIONER OF INTERNAL REVENUE, Docket No. 8841

• Decision Date: 09 March 1928
• Docket Number: Docket No. 8841,22369,31642.
• Citation: 10 BTA 1259
• Parties: WILLIAMSON VENEER CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Board of Tax Appeals

10 B.T.A. 1259 (1928)

WILLIAMSON VENEER CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket Nos. 8841, 22369, 31642.

Board of Tax Appeals.

Promulgated March 9, 1928.

G. Harvey Porter, C. P. A., for the petitioner.

W. Frank Gibbs, Esq., for the respondent.

These proceedings, which were consolidated for hearing and decision, result from the determination by respondent of deficiencies for the years 1919, 1920, 1923, 1924 and 1925, in the respective amounts of $1,140.92, $1,120.37, $661.15, $3,022.26 and $1,600.22.

It was stipulated at the hearing of this cause that the net income of $30,213.17 for the year 1923 should be reduced by the amount of $20,111.53.

Error is claimed concerning the year 1919 in that the respondent refused to allow as a deduction for said year the sum of $1,200.86, representing the cost of a saw mill and motor purchased in the year and discarded as useless in the year of purchase.

Error is claimed concerning the year 1920 in that the respondent refused to allow as a deduction for said year the sum of $2,605.68, representing a loss resulting from the destruction by fire of a warehouse and the reconstruction of a new warehouse.

Error is claimed concerning the years 1923, 1924 and 1925 in that the respondent refused to allow as a deduction for said years the respective sums of $4,765.82, $4,950.92 and $5,023.99, paid by petitioner as premiums on life insurance policies covering the life of the president of petitioner.

FINDINGS OF FACT.

The petitioner is a Maryland corporation with its principal office in Baltimore, and is engaged in the lumber business. During the World War it had contracts with the United States Government for the manufacture of walnut gunstocks, and when these contracts were canceled by the Government soon after the signing of the Armistice, November 11, 1918, it had left on hand a large quantity of unused walnut timber.

This unused walnut timber was not suitable for the petitioner's regular business demands, and in order to prepare and market it the petitioner installed a saw mill and electric motor for the special purpose of sawing up this walnut timber into marketable shapes and forms. This saw mill and motor were installed soon after the signing of the Armistice, November 11, 1918, and used for eighteen months or two years thereafter in sawing the walnut lumber. When this was completed the use of the mill and motor was discontinued and they were left standing on the petitioner's property, but were never scrapped, dismantled, or sold. There is no evidence of the cost of either the saw mill or motor.

In the conduct of its business the petitioner had a warehouse at High Point, N. C., which was built on the right of way of the High Point, Thomasville and Denton Railroad. It was the mere tenant at will of the railroad company and in the lease it was provided that the lease could be terminated by the lessor on ninety days' notice and requiring the removal of the warehouse. The original warehouse was destroyed by fire in 1920 and was replaced by one identical with the original building, which was used by petitioner until November, 1927, when the railroad company terminated the tenancy and required the removal of the warehouse. There is no evidence as to the cost of the original building, the amount of fire insurance thereon, or of the cost of the new or reconstructed building.

In order to secure bank credit for loans made to petitioner certain policies of insurance upon the life of ...