¶2The petitioner’s contention as to the first issue here is that any physical depreciation of the brick business house was more than compensated by appreciation resulting from increase in the cost of building materials during the-term of his ownership. . We have heretofore held that for the purpose of computing profit from the sale of depreciable property sustained depreciation may not be offset by appreciation in the market value of the property involved. This issue is controlled by our decisions in Even Realty Co., 1 B. T. A. 355, and Seton Falls Realty Co., 6 B. T. A. 883, which have been fully sustained by the Supreme Court in United States v. Ludey, 274 U. S. 295.
¶3The evidence discloses that the maker of the notes involved in the second issue was bankrupt in 1914 or earlier, that at the time such notes were paid Bercu was without resources of any sort and his whereabouts unknown. We are convinced that the notes in question were worthless before the taxable year.
¶4Decision will he entered for the respondent.