
    Appeal of FEDERAL HOLDING CO.
    Docket No. 2003.
    Submitted April 7, 1925;
    decided May 20, 1925.
    
      Arthur L. Jones, G. P. A., for the taxpayer.
    
      A. J. Seaton, Esq., for the Commissioner.
    Before James, Littleton, and Teussell.
    This is an appeal from a determination by the Commissioner of a deficiency in income and profits taxes of $2,574.54 for the year 1919; $3,109.21 for the year 1920; and $768.63 for the year 1921; a total of $6,452.38.'
    
      FINDINGS OE PACT.
    The taxpayer is an Ohio corporation, engaged in the business of operating a moving-picture theater in Youngstown. It owns a theater building constructed with steel framework and terra-cotta finish. The building is located on leased land on a main thoroughfare of the city, within two blocks of the central square, and in the shopping district.
    The taxpayer’s building, which was designed exclusively for use as a motion-picture theater, was constructed in 1917 and 1918 at a total cost of approximately $252,000. The structure itself cost approximately $167,000, and will reasonably last for any purpose at least 50 years. The interior construction and ornaments, suitable solely for theater purposes, cost approximately $85,000, and will reasonably last approximately 20 years.
    In making returns for the years in question, the taxpayer claimed a deduction of 5 per cent on account of depreciation and obsolescence on the total cost of the building. The Commissioner in auditing the returns allowed depreciation at the rate of 2 per cent. These respective depreciation rates are the sole issue before the Board, other than minor adjustments in the invested capital.
   DECISION.

The income of the taxpayer should be recomputed by allowing a depreciation rate of 3 per cent. Final determination will be settled on consent or on 10 days’ notice, in accordance with Rule 50.  