White Star Line v. Commissioner

WHITE STAR LINE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. White Star Line v. Commissioner Docket No. 37851. United States Board of Tax Appeals 20 B.T.A. 111; 1930 BTA LEXIS 2200; June 23, 1930, Promulgated *2200 1. Mere diminution of actual value of property owned does not result in a sustained loss even if the diminution occur in the taxable year. 2. Because of economic changes, a taxpayer decided at the end of 1924 to discontinue operations and sell its property. The property remained in taxpayer's ownership and possession throughout and was neither abandoned nor discarded during 1924, and was in fact sold in 1925. There was no evidence of complete or partial worthlessness. The taxpayer claimed a deduction for loss of useful value of its property in 1924 on the ground that the value of its operations was depressed by economic conditions. Held, there was no realized or sustained loss in 1924 and no deduction. H. A. Mihills, C.P.A., for the petitioner. P. A. Bayer, Esq., for the respondent. STERNHAGEN *111 OPINION. STERNHAGEN: The respondent, after audit of petitioner's return for 1924, increased its net income from $6,344.28 to $16,448.28 by adding four items of income and applying two items of deductions. This resulted in the determination of a deficiency of $1,263.01. The petitioner attacks none of these adjustments, but seeks*2201 to overcome the deficiency by proving a new deduction not taken on its return or heretofore claimed. The petitioner owned and operated five freight and passenger vessels on the Great Lakes. By reason of the increase of competitive *112 automobile traffic and the enactment of seamen's labor legislation, its business and profits began to decline in 1917. At the end of the season of 1924 it decided to discontinue operations and sell its boats. The boats were tied up as usual, in ordinary condition, at the end of the navigation season. In 1925 they were sold. Petitioner argues that because the value of its operations was depressed by the economic forces mentioned, it had a deductible "loss of useful value" of its boats in 1924. Clearly, there was no realized or sustained loss in 1924. Ownership and possession remained in petitioner. There had been no abandonment or discarding of the property and there was no demonstration of either complete or partial worthlessness. Mere diminution of actual value of property owned would not be a sustained loss, even if the evidence here established such a diminution in the taxable year, which we think it does not. There was simply*2202 a determination to sell, which was carried through in 1925. Without attempting to find the extent to which so-called "loss of useful value" may be recognized as a deduction, it is clear that such an application of it as is here urged would stretch the statute to the breaking point. . See ; ; . Judgment will be entered for the respondent.