
    Appeal of EMILY N. VANDERPOEL TRUST, DICKINSON W. RICHARDS, Trustee.
    Docket No. 2046.
    Submitted May 9, 1925.
    Decided January 19, 1926.
    
      Joseph W. Zeller, Esq., for the taxpayer.
    
      Lee I. Parle, Esq., for the Commissioner.
    Before James, Littleton, Smith, and Trussell.
    This is an appeal from the determination of a deficiency in income tax in the amount of $2,023.19 for the calendar year 1920, arising from the deduction by the Commissioner from the March 1, 1913, value of a certain building of depreciation to the date of sale in Maj7, 1920, for the purpose of determining the gain or loss upon the sale.
    
      FINDINGS OF FACT.
    Taxpayer is a trust created on March 30, 1901. The corpus of the trust consisted of certain land and buildings, located at 96 Liberty Street and at 205-209 South Salina Street, Syracuse, N. Y. The value of the property, designated as 205-209 South Salina Street, on March 1, 1913, was $251,800, $196,800 representing the value of the land and $55,000 representing the value of the building.
    The trust instrument provided, in part, as follows:
    To have and to hold the above granted premises unto the said parties of the second part, and the survivor of them, and his or their successor or successors, in trust nevertheless to hold and manage the same, and to receive the rents, issues and profits thereof, and after deducting all necessary costs and expenses to apply out of the net rents, issues and profits thereof, the sum of One thousand dollars in each year to the use and education' of Floyd Lewis Vanderpoel, the grandson of the party of the first part, in such school or schools, and college or colleges as the party of the first part shall select, or. in the other expenses of his maintenance and education, as the party of the first part shall direct, subject to the approval in writing of Elizabeth B. Vander-poel, the mother of said Floyd, until said Floyd shall attain the age of twenty-three years, or until he shall die, or until the party of the first part shall die, whichever event shall first occur.
    And said trustees shall pay the balance of the net rents, issues and profits of said trust estate to the party of the first part for and during the term of her natural life by means of quarterly payments in each year unless said trust shall sooner terminate as hereinafter provided.
    On June 1, 1906, the trustees leased the premises at 205-209 South Salina Street for a period of 10 years from May 1, 1909, at an annual rental of $13,000, in which lease the lessee agreed to pay for all ordinary repairs and all alterations and additions, together with all charges against the said property during the term of the lease.
    On November 27, 1912, the original lease was amended and extended for a period of seven years to expire April 30, 1920, the taxpayer agreeing to contribute $4,000 toward the cost of the removal of the party wall between the leased building and the building next south thereof occupied by the lessee and the substitution of steel columns and girders in place thereof, in consideration of an increased rental of $240 a year and the restoration of alterations by the lessee at the termination of the lease as amended.
    On February 26, 1915, the original lease was further extended to expire on April 30, 1929. During the period from February 1, 1913, to February 1, 1920, the lessee expended approximately $24,000 for repairs, alterations and additions to the leased premises. On April 26, 1920, by mutual agreement between the lessor and the lessee, the lease was canceled as of May 1, 1920, on which date the trustees sold the premises at 205-209 South Salina Street to the former lessee for $275,000.
    
      The net income of the trust was regularly paid to the life beneficiaries. The trustees rendered fiduciary returns which showed no taxable income prior to the year 1920 against which any deduction for exhaustion, wear, and tear of the trust property could be taken. For the year 1920 the trust reported a net profit of $17,257.20, being the difference between the value on March 1, 1913, and the sales price of the property, less $5,542.80 expenses of the sale. The Commissioner computed depreciation at the rate of 3 per cent upon the March 1, 1913, value of the building of $55,000 from, that date to the date of sale and increased the profit from the sale in the amount of $11,275.
   DECISION.

The determination of the Commissioner is approved.  