
    CHURCH AND HOILES COMPANY, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
    Docket No. 3526.
    Decided September 27, 1926.
    
      Laurence Graves, Esg., for the petitioner.
    
      W. II. Lawder, Esq., for the respondent.
   Littleton:

The Commissioner determined deficiencies of $617.88 for 1919, $1,791.73 for 1920, and $1,386.44 for 1921. Approximately $1,800 of the total of the deficiencies is in controversy by reason of petitioner’s claim that the deduction for exhaustion, wear and tear of its laundry building should have been computed at the rate of 5 per cent instead of 2 per cent per annum.

FINDINGS OF FACT.

Petitioner is an Illinois corporation, engaged in the manufacturing, renting, and laundering of linen, principally to butcher shops.

In 1912, it constructed, at a cost of $64,645.69, a two-story building, 125 ft. by 106 ft., of concrete foundation and brick walls, with light wood interior and roof, in which to carry on its operations. This cost was stipulated to be the fair market value of the building on March 1, 1913. The first and second floors each consisted of one large room containing various machines for laundering and manufacturing purposes. In the process of laundering soiled linen, chlorine gas is used to a considerable extent and to a much greater degree in bleaching the cloth used in the manufacture of new garments. All cloth is purchased in the unbleached state.

The first floor of the building was used for laundering purposes. Escaping lime and chlorine gas caused the parts of the building with which they came in contact to deteriorate more rapidly than would otherwise be the case. In addition, the moisture from the laundering process shortened the useful life of the interior woodwork. By reason of the effect of gas and moisture, petitioner has to date been required to replace at least one-half of the steel window casings once, and the skylight twice. In addition, it has been necessary to replace certain interior portions of the brick wall as a result of deterioration from gas. The joists were seriously affected but have not been replaced, due to the interruption which would be occasioned thereby. The building was especially constructed for laundry purposes, with slanting floors and built-in gutters, underground water pipes and sewers. It would not lend itself to the profitable operation of a different character of business. The building is now inadequate for petitioner’s needs and for some time consideration has been given to plans for the erection of a new and more modern structure. The probable useful life of the building in question in petitioner’s business was twenty-five j^ears. Depreciation was sustained at the rate of 4 per cent per annum.

Order of redetermination will he entered on 15 days' notice, under Rule 50.  