Milliken:
This proceeding results from a determination of a deficiency by respondent for the calendar year 1919 in the sum of $3,166.90. The issue involved is the gain or loss resulting from the sale in 1919 of the buildings and equipment of the petitioner.
FINDINGS OF FACT.
Petitioner is a corporation organized and existing under the laws of the State of Mississippi. Petitioner purchased land to be used as a site for an opera house in Greenville, Miss., in 1899, for the sum of $4,711. The value of the land was determined by the Commissioner to be $14,000 on March 1, 1913, and with respect to such •valuation no error is assigned by petitioner. In 1899 petitioner erected an opera house on the land thus purchased at a cost for the buildings and furnishings of $26,585.51. In 1914 petitioner made certain improvements to the buildings, expending the sum of $14,000, about which there is no controversy. In 1919 the land, buildings and equipment were sold for $55,000. The Commissioner in the determination of the deficiency took the cost of the building erected in 1899 of $25,585.51, subjected the same to a depreciation rate of 2 per cent, resulting in a March 1, 1913, value of the buildings of $18,595.13, and depreciated the building at a rate of 2¾ per cent from March 1, 1913, to the date of sale in 1919. Petitioner objects to the March 1, 1913, value of the building as determined by the Commissioner and the rate of depreciation applied from March 1, 1913, to 1919.
The opera house is located on the southeast corner of Poplar and Main Streets, Greenville, Miss. When it was erected in 1899, the streets adjacent to the building were not paved nor were there any buildings of any value erected in close proximity to the building of the petitioner. By March 1, 1913, the streets had been paved in front and on the side of the opera house and valuable and modern buildings had been erected in close proximity. The population of Greenville, Miss., doubled from 1899 to 1913. The opera house is of brick construction, three stories in height, and had a seating capacity on March 1, 1913, of 700 persons. The building was maintained in a good state of repair prior and subsequent to March 1, 1913. In 1913 the building owned by petitioner was the only opera house in Greenville, Miss., but by 1919 a syndicate amusement company was making arrangements to erect an amusement house in Greenville, and the officers of the corporation, fearing outside competition, sold the building of the petitioner to a concern operating a chain of amusement houses in that section of the country.
The building, together with the improvements and furnishings, was of the fair market price or value of $35,000 on March 1, 1913, and a rate of depreciation of 2 per cent should be used, in determining the gain or loss on the sale, for the period March 1, 1913, to 1919.
Judgment will he entered on 15 days' notice, under Rule 50.