Pacific Refrigerating Co. v. Commissioner

This is a petition to review decision of the United States Board of Tax Appeals in which the sole question is the cost basis of depreciable property owned by the petitioner and, consequently, the amount of the annual allowance for depreciation. The property, consisting of real estate with buildings thereon, was conveyed to the petitioner before the taxable year and the question is whether or not the cost to petitioner or to its transferors, who made a profit of $50,-000, is to be used as the cost basis for depreciation. The Commissioner, and the Board of Tax Appeals, held that the cost to the transferor should be used as the basis for depreciation for the reason that after the transfer of the property to the petitioning corporation the transferors remained in control of the corporation, owning more than 80 per cent of its stock. Rev.Act of 1932, c. 209, 47 Stat. 169 , Secs. 112(b) (5), 114(a), 26 U.S.C.A. §§ 112 (b) (5), 114(a).

The question involved is factual, as to which the Board of Tax Appeals has exclusive power of determination, and its decision must stand unless we can say that there is no substantial evidence to support it.

The facts, briefly stated, are that Walter F.…