358 F2d 133 United States v. Kimball Gas Products Company

358 F.2d 133

UNITED STATES of America, Appellant,

No. 20449.

United States Court of Appeals Fifth Circuit.

March 31, 1966.

Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson, Atty., Dept. of Justice, Washington, D. C., Ernest Morgan, U. S. Atty., San Antonio, Tex., William A. Friedlander, Atty., Dept. of Justice, Washington, D. C., Harry Baum, Atty., Dept. of Justice, Washington, D. C., Fred J. Morton, Asst. U. S. Atty., for appellant.

Benjamin L. Bird, Fort Worth, Tex., Weeks, Bird, Cannon & Appleman, Fort Worth, Tex., of counsel, for appellee.

Before BROWN, WISDOM, and BELL, Circuit Judges.


view counter

This case is now controlled by Fribourg Navigation Company, Inc. v. Commissioner of Internal Revenue, 1966, 383 U.S. 272, 86 S.Ct. 862, 15 L.Ed.2d 751. In Fribourg the Supreme Court held that, "as a matter of law, the sale of a depreciable asset for an amount in excess of its adjusted basis at the beginning of the year of sale" does not bar "deduction of depreciation for that year".


Here the sole issue, as the parties stipulated, is the question: "Whether Plaintiff (Appellee) depreciated its plant and gathering system below salvage value during the fiscal year ended January 31, 1959". As of the beginning of the short year here involved — April 1, 1958 — the taxpayer had a depreciated basis or unrecovered cost in the depreciable assets of $709,552.23; it claimed $161,921.93 depreciation deductions in the short year — leaving a depreciated basis or unrecovered cost of $547,630.30. According to the undisputed evidence, $150,000 was the salvage value of the assets. We hold therefore that the taxpayer properly depreciated the assets in the year in question; that the assets were not depreciated below the remaining basis at the beginning or end of the year. The taxpayer maintained its burden of proof.


The judgment is affirmed.