
    Appeal of JAMES F. STEELE.
    Docket No. 1512.
    Submitted April 29, 1925.
    Decided June 25, 1925.
    
      Thomas E. Finley, Esq., for the taxpayer.
    
      Benjamin II. Saunders, Esq., for the Commissioner.
    Before Marquette, LaNsdoN, and Greejsu
   This appeal is from an asserted deficiency of $957.32 in income and profits taxes for the year 1919. The whole amount' is in controversy. The single issue is whether the Commissioner has allowed a proper depletion rate for the exhaustion of coal mined from a tract of coal land leased or bought by the taxpayer in 1908 or 1909. From the oral and documentary evidence the Board makes the following

FINDINGS OP PACT.

The taxpayer is an individual living in Pittsburgh, Pa. For many years he has been engaged in the business of buying and leasing coal lands, and in mining and selling coal. In 1908 or 1909 he bought the coal underlying a tract of 20 acres of land situated about 4 miles from Pittsburgh, Pa., and paid therefor the amount of $8,500. The coal was of a good quality in what is known as the Pittsburgh seam, which is about 5.6 feet in thickness in that locality. At March 1, 1913, the recoverable coal, all of which was under about 16 acres of the land, ivas estimated at 132,000 tons. The mine was worked out in 1922 at which date 160,220 tons of coal had been recovered.

The coal land in question was difficult of access when acquired by the taxpayer, who spent about $10,000 in securing right of way for roads, in building roads, in driving a tunnel to the recoverable coal, and in the construction of other facilities required for the successful and profitable operation of his coal mine. No evidence as to the exact amounts invested in capital assets other than the right to extract coal was offered at the hearing, except the taxpayer’s own statement that he spent more than $10,000 before he mined or sold any coal.

Between the years 1913 and 1922 the taxpayer mined coal from the land on his own account and leased portions of the tract to other operators. All the coal was worked out by about 1922. The coal ivas sold directly to peddlers from platforms at the mine or on the local market at Pittsburgh, where it was delivered by wagon or truck.

In his income and profits-tax return for 1919, the taxpayer took depletion on,22,500 tons of coal mined from his property by a lessee, the Hanlon Coal Co., at the rate of 40 cents a ton; and on 9,035 tons •of coal mined from his property by himself at the rate of 40 cents a ton, or a total depletion for the year in question in the amount of $12,714. The depletion so taken was intended to cover the exhaustion of the coal and the depreciation or amortization of the cost of the facilities used in operating the mine. Upon audit of the returns so made, the Commissioner reduced the depletion rate to 7.75 cents per ton, and allowed a total depletion for the year in question in the amount of $2,463.33, and thereby determined a deficiency in tax of $957.32, and so notified the taxpayer in a letter mailed on November 17, 1924. From the determination of the Commissioner the taxpayer filed this appeal on January 10, 1925.

DECISION.

Tlie determination of the Commissioner is approved.  