BODY, District Judge.
The principal question presented by the government's motion for summary judgment is whether a downward adjustment on taxpayer's books and records of the value of its bank building, furniture and fixtures in compliance with the Pennsylvania banking law constitutes a deductible loss within the meaning of Section 165 of the Internal Revenue Code of 1954.
The relevant facts have been stipulated by the parties. The plaintiff Trust Company instituted this civil action on September 26, 1962 to recover taxes assessed, collected and returned by the defendant, acting through the Commissioner of Internal Revenue, for the calendar years 1954, 1955 and 1956.
Taxpayer is a Pennsylvania corporation engaged in the business of banking. In October 1956 taxpayer moved the location of its office from 6 East Main Street, Schuylkill Haven, Pennsylvania, to 24-28 East Main Street in the same borough. Plaintiff's new bank had a cost value of $189,891.09 and the furniture and fixtures therein had a cost value of $61,629.70.
The Banking Code of the Commonwealth of Pennsylvania
requires that a banking institution allocate no more than twenty-five percent of its combined capital and surplus to its banking house furniture and fixtures.
In 1956 taxpayer complied with the above-mentioned statute by making a downward adjustment on its books and records of the value of its banking house and furniture and fixtures in the total amount of $101,510.79. The adjustment or "write down" was made as follows:
Unadjusted: $189,891.09 $61,629.70
Adjustment: 98,232.97 3,277.82
Balance: $ 91,658.12 $58,341.88
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