
    Appeal of MERKLE BROOM CO.
    Docket No. 4953.
    Submitted November 15, 1925.
    Decided March 31, 1926.
    
      John F. McOarren, Esq., for the taxpayer.
    
      Ellis W. Manning, Esq., for the Commissioner.
    Before Smith, James, Littleton, and Trtxssell.
    The taxpayer appeals from the determination of a deficiency in income and profits tax for the years 1918 and 1919 in the aggregate amount of $4,147.62. The question in issue is proper depreciation rates upon (1) buildings, (2) machinery and equipment, and (3) automobiles for the tax years 1918 and 1919.
   BINDINGS OB BACT.

The taxpayer was incorporated in 1892 under the laws of Illinois, ' and is engaged in the manufacture of brooms from broom corn. In its original return for 1911 the taxpayer deducted from gross income $2,451.15 for depreciation, which was approximately 3 per cent of its plant account, which account was not segregated on its books into (1) buildings, and (2) machinery and equipment. No claim for depreciation was made in its return for 1918. In its return for 1919 it deducted depreciation at the rate of 5 per cent on its plant account, and at the rate of 33⅜ per cent on automobiles. In its return for 1920 depreciation was claimed at the rate of 3 per cent on the plant account and nothing on automobiles. The Commissioner has determined proper rates of depreciation for the years 1918 and 1919 to be as follows:

Per cent.
Buildings_ 3
Machinery and equipment_ 6
Automobiles_ 20

A proper segregation of the plant account as between buildings, on the one hand, and machinery and equipment, on the other, is 54.7 per cent of the total for buildings and 45.3 per cent of the total for machinery and equipment.

The taxpayer’s main building is 200 feet long by 200 feet wide; it has two stories and a basement. The first building erected was 40 feet wide by 100 feet long, three stories high; the buildings were destroyed by fire around 1900. The present buildings are all of brick construction and are kept in a fair state of repair.

In the manufacture of brooms the taxpayer uses many kinds of machinery, such as a sizing machine, which sorts the corn into various lengths; a bumping machine, which makes the corn stop at the proper length; a corn-cutting machine, which cuts off the fibers; a cutting machine, which separates the fiber as it is grown on the corn; a heading machine, which takes the seeds off the corn, known as a reel by the farmers; a tying machine, by which the brooms are tied with wire; a clipping machine, which clips off the ends of the brooms; a hand-polishing machine, and many others. Some of the machines vibrate excessively when in use. The degree of vibration varies with the different machines. The average life of all the different machines of the taxpayer is from 5 to 10 years. Some of the machines may last more than 10 years and some less than 5 years.

The taxpayer uses in its business automobiles, such as Dodges, Hupmobiles, Buicks, and Fords. These are used by salesmen in traveling throughout the country. As a rule, automobiles are exchanged for new ones at the end of the second year.

Proper rates of depreciation for the years 1918 and 1919 are:

Per cent.
Buildings--- 3
Machinery and equipment_ 10
Automobiles_ 25

Order of redet&mdinoMon will be entered on 10 donjá notice, under Rule 50.  