The opinion
*538 OPINION.
Phillips:
The sole question involved in this appeal is the value of the leasehold interest transferred to the taxpayer on March 29, 1915, in settlement of the subscriptions to its capital stock in the sum of $50,000. The testimony given by two qualified real estate dealers specializing in property in this vicinity was to the effect that the leasehold was reasonably worth from $70,000 to $95,000 in cash on the date in question. After carefully considering this testimony and giving due consideration to the contention of the Commissioner that a part of the value of the leasehold on March 29, 1915, was the result of improvements or alterations made in the leased premises by the taxpayer for the purpose of its own business, we conclude that the lease on March 29, 1915, had an actual cash value of at *539 least $50,000,' and that the taxpayer is’ entitled to include such amount in its invested capital. During the years in question the taxpayer should also be allowed to deduct exhaustion upon the leasehold on the basis of a cost of $50,000 to be prorated over the life of the lease from March 29, 1915. In computing invested capital for the years in question the surplus of the taxpayer should be reduced by the amount of exhaustion sustained upon the leasehold in prior- years.
AruNdell not participating.