Eastern Shoe Mfg. Co. v. Commissioner

EASTERN SHOE MANUFACTURING CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Eastern Shoe Mfg. Co. v. Commissioner Docket No. 12163. United States Board of Tax Appeals 8 B.T.A. 1169; 1927 BTA LEXIS 2714; November 3, 1927, Promulgated *2714 The cost of moving and resetting machinery in a new location held to be an ordinary and necessary business expense and deductible from gross income. Samuel J. Stone, Esq., for the petitioner. L. C. Mitchell, Esq., for the respondent. SMITH *1169 This is a proceeding for the redetermination of a deficiency in income tax for the year 1921 in the amount of $258.86. FINDINGS OF FACT. Prior to 1921 the petitioner, a Massachusetts corporation, had its plant in rented quarters on Washington Street, in the city of Lynn, Mass. In 1921 it moved to new quarters on Broad Street in the same city, where it had obtained a lease for a period of 3 years and 3 months. The cost of moving its machinery and benches from the old location and of setting them up in the new location amounted to $2,589.63, which it deducted from gross income in its income-tax return for 1921, as an ordinary and necessary expense, explaining that it represented the cost of rearrangements and replacements. There were, however, no replacements of the machinery and no replacements of moment of lumber, etc. The Commissioner disallowed *1170 the deduction from gross income*2715 of $2,589.63, representing the cost of moving and resetting machinery. OPINION. SMITH: The taxing act permits a corporate taxpayer to deduct from gross income in its income-tax returns ordinary and necessary expenses. Section 234(a)(1), Revenue Act of 1921. The respondent disallowed the deduction of the cost of moving and resetting machines upon the supposition that it represented the cost of improvements and betterments. The evidence clearly shows, however, that such was not the case. The amount was a legal deduction from gross income. Judgment will be entered on 15 days' notice, under Rule 50. Considered by LITTLETON, TRUSSELL, and LOVE.