
    Appeal of Norwood Lumber Co.
    Docket No. 3785.
    Promulgated February 28, 1927.
    
      Evert L. Bono, Esq., for the petitioner.
    
      Arthur J. Seaton, Esq., for the Commissioner.
   Phillips :

This is an appeal from the determination by the Commissioner of a deficiency of $1,024.79 in income and excess-profits tax for the year 1919, due to the reduction by the Commissioner of the amount taken by the petitioner as a deduction on account of depletion of timber. The question at issue is the fair market value of the timber as of March 1, 1913.

FINDINGS OF FACT.

The petitioner is a West Virginia corporation having its principal place of business at Forney, N. C. About March 1, 1910, the petitioner' purchased a tract of timborland, known as the Forney Creek Block, located in Swayne County, North Carolina, on the Murphy branch of the Southern Railway, at a price of $225,476.39, which it has since owned and continuously operated. Upon acquiring the property, a mill was located about 1,500 feet from the railroad and cutting of the timber was begun. A railroad was built from the mill and extended to the timber as the operation developed.

On March 1, 1913, there were on this property approximately ninety-six million feet of virgin timber, consisting of 20 per cent hemlock, 41 per cent spruce, and 39 per cent of hardwoods. The development of the tract was then well under way, the'sawmill was in operation and several miles of railroad had been built.

The fair market value of the standing timber on the taxpayer’s property on March 1, 1913, was $2 per thousand feet for hemlock and $4.50 for spruce and hardwoods. During 1919 timber was depleted to the extent of 2,991,097 feet of hemlock and 7,212,104 feet of spruce and hardwood. In computing the deficiency the Commissioner allowed a deduction of $30,603 for depletion of the timber.

Decision will be entered on 15 days’ notice, under Rule 60.  