
    Appeal of FR. BERGNER & CO.
    Docket No. 5546.
    Decided July 28, 1926.
    Replacement cost of depreciable assets as of March 1, 1913, depreciated from the date of acquisition to that date, can not, in the absence of other evidence, be accepted as the value for depreciation allowances for the taxable years in question.
    
      Elmer L. Hatter, O. P. A., for the petitioner.
    
      F. O. Graves, Esq., for the Commissioner.
    Before Marquette, Morris, and Geeen.
    This is an appeal from the determination of deficiencies in income and profits taxes for the years 1919 and 1920 in the amounts of $527.18 and $384.36, respectively. The only issue presented is the value of the taxpayer’s building for purposes of depreciation.
    FINDINGS OF FACT.
    1. The taxpayer is a Delaware corporation with its principal place of business at Baltimore, Md.
    2. During the years involved the taxpayer owned a building, erected by it during 1905 and 1906, and located at Paca and Cross Streets, Baltimore. The total cost of this building was $90,779.84. The reproduction cost of said building as of March 1, 1913, was $156,534.51.
    
      3. The Commissioner allowed depreciation based on cost at the rate of 2 per cent for the taxable years in question.
   OPINION.

MoRRis:

The only question presented to us for consideration is the basis for depreciation allowances for the taxable years in question, both parties agreeing that 2 per cent is a reasonable rate.

Through the use of the original contractor’s records of material and labor used in the erection of the building, the taxpayer has established the March 1, 1913, replacement cost, using material and labor prices on that date. It contends that this cost, depreciated from the date of the completion of the building in 1906 to March 1, 1913, should be taken as the basis for computing its depreciation deductions for the taxable years in question.

We have heretofore held that replacement cost as of March 1, 1913, even if properly depreciated, does not necessarily prove the fair market value as of that date. Appeal of Kinsman Transit Co., 1 B. T. A. 552; Appeal of Valley Steamship Co., 1 B. T. A. 1107; Appeal of Rockford Malleable Iron Works, 2 B. T. A. 817; Appeal of Chicago Railway Equipment Co., 4 B. T. A. 452.

The deficiencies are $527.18 for 1919 and $384.86 for 1920. Order will be entered accordingly.  