
    Appeal of JEWETT & CO.
    Docket No. 5416.
    Submitted December 2, 1925.
    Decided February 18, 1926.
    
      Barry Mohun and Benjamin Mahler, Esqs., for the taxpayer.
    
      John W. Fisher, Esq., for the Commissioner.
    Before Littleton, Smith, and Teussell.
    This is an appeal from the determination of deficiencies in income and profits tax for the calendar years 1919, 1920, and 1921, in the amounts of $157.20, $1,526.10, and $237.81, respectively, arising from adjustment of deductions for exhaustion, wear and tear, and obsolescence of patterns. The taxpayer originally claimed a deduction of 3½ per cent of the total sales for the year, which was disallowed by the Commissioner, who computed the deduction at 6 per cent upon cost, plus additions during the years here involved. At the hearing the taxpayer, admitting the correctness of the Commissioner’s method, contended that its patterns, while having a physical life of many years, become obsolete within nine years.
    FINDINGS OF FACT.
    Taxpayer is a New York corporation engaged in the manufacture and sale of wood, coal, and gas stoves, with principal office and place of business at Tonawanda.
    As a result of the method of determining the deduction for exhaustion, wear and tear, and obsolescence of patterns, by the National Association of Stove Manufacturers, the taxpayer computed this deduction during the years here involved and those prior thereto upon the basis of 3½ per cent of the total sales for the year. Tor certain prior years the Commissioner allowed the deductions claimed, but for the taxable years changed the method of determining the deduction to 6 per cent of the cost and adjusted the income and the invested capital accordingly.
    By reason of the constant change in designs and styles of stoves to meet the public demand, patterns in use for a period of from eight to twelve years are only used for the manufacture of repair parts and, to a minor extent, in the manufacture of certain stoves, the designs and styles of which have been changed. The average useful life of patterns used by the taxpayer is ten years, and the deduction for exhaustion, wear and tear, and obsolescence should be computed upon the basis of 10 per cent of the cost, plus additions.
   DECISION.

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