Koshland

This is an appeal from a judgment awarding appellee, as executrix of the estate of Emelie Cerf Koshland, deceased, refunds of income taxes paid by the decedent for the taxable years 1944 and 1945.

The material facts are undisputed. The decedent and her husband purchased the Mayflower Hotel in Portland, Oregon in 1925 for the sum of $185,000 plus accrued real property taxes. For the purpose of computing depreciation under the income tax laws the decedent allocated $53,000 of the purchase price of the property to the hotel building. The decedent’s husband died in 1928 and title to the property thereupon vested in the decedent as sole owner by operation of law. Thereafter the decedent’s regular and sole trade and business was the operation of the Mayflower Hotel and rental of its auxiliary store units. Prior to 1946 improvements were made upon the hotel building in the amount of $2092.16. By 1946 the decedent had been allowed a total of $53,684.16 as depreciation on the hotel building for income tax purposes. On May 20, 1946 the hotel building was destroyed by fire. The decedent received proceeds of fire insurance policies on the hotel property in the amount of $45,000. In December…