
    Appeal of TWELVE EAST THIRTY-FIRST STREET HOTEL CO.
    Docket No. 3645.
    Submitted October 13, 1925.
    Decided November 18, 1925.
    A reasonable allowance for exhaustion, wear and tear of a certain hotel building for the year 1919 found to be an amount computed at 4 per cent upon the cost of the building.
    
      Edward Thompson, Esq., for the taxpayer.
    
      John W. Fisher, Esq., for the Commissioner.
    Before James, Littleton, Smith, and Trussell.
    This appeal is from the determination of a deficiency in income and profits taxes for the year 1919 in the amount of $5,239.75. Only so much of the deficiency is in controversy as arises from the disal-lowance of part of the deduction taken by the taxpayer in its return for the year 1919 as an allowance for the exhaustion, wear and tear of the building owned by it.
    
      FINDINGS OF FACT.
    The taxpayer is a New York corporation with, its principal office in New York City.
    On June 30, 1919, the taxpayer acquired, at a cost oí $226,127.80, a certain hotel building situated in New York City. It retained title to the building until May 30, 1920, at which time the building was transferred to the Twelve East Thirty-first Street Eealty Co.
    The taxpayer, in computing its net income for the year 1919, deducted as an allowance for the exhaustion, wear and tear of the building in question, for the period July 1 to December 31, 1919, an amount computed at the rate of 4 per cent per annum on a valuation of $226,127.80. The Commissioner, upon audit of the taxpayer’s return, allowed for the exhaustion, wear and tear of the building an amount computed at the rate of 2 per cent per annum on the valuation claimed and disallowed the remainder of the deduction. Subsequent to the mailing of the deficiency letter herein, the Commissioner, upon consideration of the returns of the taxpayer and the Twelve East Thirty-first Street Realty Co. for the years 1920 and 1921, allowed for each year for the exhaustion, wear and tear of the building in question an amount computed at the rate of 4 per cent per annum on the- valuation mentioned.
    A reasonable allowance for the exhaustion, wear and tear of the taxpayer’s building during the period July 1 to December 31, 1919, is an amount computed at the rate of 4 per cent per annum on a valuation of $226,127.80.
   DECISION.

The deficiency should be computed in accordance with the foregoing findings of fact. Final determination will be settled on 10 days’ notice, in accordance with Rule 50.  