Hotel de France Co. v. Commissioner
United States Board of Tax Appeals
Exhaustion of a leasehold acquired by a corporation in 1918 for capital stock is based upon the value of the stock when issued. The value of a leasehold on a given date is a question of fact which must be determined in the light of the evidence in the record before the Board. Where the term of the life of a leasehold can be accurately determined, the deduction for its exhaustion must be computed accurately in accordance with such term.
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Exhaustion of a leasehold acquired by a corporation in 1918 for capital stock is based upon the value of the stock when issued. The value of a leasehold on a given date is a question of fact which must be determined in the light of the evidence in the record before the Board. Where the term of the life of a leasehold can be accurately determined, the deduction for its exhaustion must be computed accurately in accordance with such term. Corporate organization expenses are no part of the cost of a leasehold acquired at the time of such organization, and may not be included in the basis for the…
1Opinion of the Court
*30OPINION.
Sternhagen.
The taxpayer was entitled to a reasonable allowance for the exhaustion of its leasehold, based upon its cost. The issue here is as to the amount to be recognized as the cost. For the leasehold and liquors owned by Delenne it issued its capital stock, the value of which was of necessity the reflection of the value of the assets which it represented. In so far as these assets consisted of the supply of liquors, both parties agree that they were worth $8,997.12. The rest consists entirely of the leasehold, and the controversy is as to its value when it was acquired by the…
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