
    Appeal of BLANCHE BURBANK.
    Docket No. 4406.
    Submitted February 4, 1926.
    Decided March 31, 1926.
    
      Edw. Thompson, O. P. A., for the taxpayer.
    
      W. PL. Lawder, Esq., for the Commissioner.
    Before SterNhageN and LaNsdoN.
    This appeal is from the determination of a deficiency in income taxes for the year 1920 in the amount of $3,701.58. It arises from the Commissioner’s addition to income of the amount of $16,676, deducted by the taxpayer as cost of repairs and alterations of rental property.
   FINDINGS OF FACT.

The taxpayer is an individual who resides in and owns the Hotel Plaza Building, in San Francisco.

During the taxable year she expended the amount of $9,795.09 in converting three small store rooms on the first floor of her building into a single large room for the use of one Hirschman, a jeweler. The alterations and improvements were not in the nature of repairs and were made in conformity with an agreement with Hirschman that he would lease the room for a term of 10 years at a rental of $750 per month for the first five years, and of not less than $800 per month for the second five years. The exact amount of the rental for the second five years was to be determined by arbitration. Prior to such rearrangement of the space, the three rooms had been rented from month to month for a total return of $525 per month.

The taxpayer expended the amount of $6,860.91 in altering and reconstructing two rooms in her building that previously had been rented by the Plaza Hotel Operating Co. and used, respectively, as a bar-room and as a club-room for men. The changes in these rooms consisted in the removal of the bar-room and club-room fixtures, the construction of an outside opening of the club-room into the street, and the closing of an arched doorway that had previously connected the two rooms. Before these changes were made, the rooms had not produced any revenue for some time. After the changes the barroom was used as a barber shop by the Plaza Hotel Operating Co., and the club-room was used by a milliner.

The deficiency for 19W is $3,701.58. Order will be entered accordingly.  