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WARNECKE v. UNITED STATES

June 7, 1966

George W. Warnecke, individually and as Executor of the Estate of Catherine M. Warnecke, Plaintiff
v.
United States of America, Defendant


Levet, District Judge.


The opinion of the court was delivered by: LEVET

Opinion, Findings of Fact and Conclusions of Law

LEVET, District Judge

 This is a tax refund suit brought by George W. Warnecke individually and as executor of the estate of his wife, Catherine M. Warnecke, to recover income taxes paid for the calendar years 1953, 1954 and 1955. The respective amounts sought are $2,243.05, $23,356.38 and $24,593.73 for a total of $50,193.16, with interest.

 After hearing the testimony of the parties, examining the exhibits, pleadings, briefs and Proposed Findings of Fact and Conclusions of Law submitted by counsel, this court makes the following Findings of Fact and Conclusions of Law:

 Findings of Fact

 1. Catherine M. Warnecke at all times hereinafter mentioned until her death on July 27, 1954, was the wife of the plaintiff, George W. Warnecke. On or about August 20, 1954, plaintiff, George W. Warnecke, was appointed executor of the will of said Catherine M. Warnecke by decree of the Surrogate's Court, County and State of New York, and said plaintiff, George W. Warnecke, since said date has been and now is acting as such executor.

 2. On March 12, 1954, George W. Warnecke and Catherine M. Warnecke duly filed their joint Federal income tax return on Form 1040 covering the calendar year 1953, in which they claimed a deduction for depreciation with respect to the Paul Brown Building in the amount of $119,237.50. Upon examination of said return for 1953, the Commissioner of Internal Revenue disallowed $15,893.33 of said amount and assessed income taxes against plaintiff for 1953 in the amount of $2,243.05.

 3. On March 22, 1955, George W. Warnecke individually and as executor of the will of Catherine M. Warnecke, duly filed a joint Federal income tax return on Form 1040 covering the calendar year 1954, in which he claimed a deduction for depreciation with respect to the Paul Brown Building in the amount of $238,275.24. Upon examination of said return for 1954, the Commissioner of Internal Revenue disallowed $35,222.83 of said amount and assessed additional income taxes against plaintiff in the amount of $26,224.86, of which plaintiff demands a refund in this action of $23,356.38.

 4. On April 14, 1956, George W. Warnecke duly filed his Federal income tax return on Form 1040 covering the calendar year 1955, in which he claimed a deduction for depreciation with respect to the Paul Brown Building in the amount of $229,765.41. Upon examination of said return for 1955, the Commissioner of Internal Revenue disallowed $33,964.88 of said amount and assessed additional income taxes against plaintiff in the amount of $27,537.20, of which plaintiff demands the refund in this action of $24,593.73.

 5. George W. Warnecke purchased the Paul Brown Building, the land underlying it, and the equipment contained in the building on July 3, 1953 and continued to own the property during all the relevant periods involved herein. The Paul Brown Building, a high rise multi-office building with retail stores on the ground floor and offices above, is located at 814 Olive Street, in the downtown business district of St. Louis, Missouri.

 6. In 1953, the downtown section of St. Louis was the financial center and central portion of the City and County of St. Louis; the area contained the largest banks, the main Post Office, Federal Customs House, the Civil Courts Building, the City Hall, the Federal Reserve Bank, a number of leading motion picture houses and legitimate stage theatres, the leading department stores, and the major office buildings.

 7. Prior to purchasing the Paul Brown Building, plaintiff, George W. Warnecke, personally inspected the interior and exterior of the building, the equipment, the state of repairs, and on the basis of this knowledge paid the sum of $4,239,555.78, of which $3,600,000 was represented by a first mortgage, as the purchase price of the said building.

 8. The Paul Brown Building was constructed in 1927; two of its floors were not completed until 1942; the construction was steel and concrete. On the south 40% of the ground floor area was a building twelve stories in height. The exterior walls of the first three floors were faced with terra cotta; above they were faced with brick. The first floor lobby floor and walls were marble; above the ground floor the walls of the corridors were of marble slab with marble baseboard. Walls and ceiling were plaster finish. The interior of the offices contained maple floors, standup type radiators, incandescent direct and indirect lighting fixtures, wood baseboards, windows and door trim. The building was served by eight Otis passenger elevators, one of which was used for freight. Approximately 40% of the building was air conditioned.

 9. In 1953, the Paul Brown Building was the newest and considered to be the leading office building in downtown St. Louis. The plaintiff, George W. Warnecke, testified as to the building's physical condition in 1953. From that testimony it is fair to say that the building was in need of certain repairs and that some of its facilities and construction were not of the most modern type; however, it also appears that none of the other buildings in St. Louis was more modern than the Paul Brown Building. Between 1927 and 1953 no new office ...


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