Stearns v. Commissioner

5 B.T.A. 958, 1926 BTA LEXIS 2724

• Court: United States Board of Tax Appeals
• Decided: December 30, 1926
• Docket: Docket No. 2297.
• Status: Published

Opinion

OPINION.

Milliken:

Section 202 of the Revenue Act of 1918, so far as pertinent, provides as follows:

Sec. 202. (a) That for the purpose of ascertaining the gain derived or loss sustained from the sale or other disposition of property, real, xiersonal, or mixed, the basis shall be—

(1) In the case of property acquired before March 1, 1913, the fair market price or value of such property as of that date * * *.

Under this section, the proper basis for determining loss upon the sale of property acquired before March 1, 1913, is the cost or fair market price or value on March 1, 1913, whichever is lower. Accordingly, before we can determine whether a loss has been sustained in the event of a sale, it is necessary for us to know both the cost and the March 1, 1913, value of the property sold. Appeal of Anniston City Land Co., 2 B. T. A. 526. The petitioner has shown the cost of only a portion of the properties involved. The only evidence submitted as to March 1, 1913, value of the properties was the amount at which they were valued by agreement between-the parties in November of 1913. We are unadvised as to the elements or basis entering into that valuation. Apparently, the parties merely got together at that time and agreed that the partnership assets and the various real estate holdings had a certain value. Value to the parties in interest may have been entirely different from a value determined by persons dealing at arm’s length, and there is no evidence that the value determined upon by them in November, 1913, was the fair market price or value on March 1, 1913. As we have neither cost nor March 1, 1913, value, we are unable to determine that the Commissioner committed the error alleged, and we can only affirm his action in disallowing the deduction.

Judgment will be entered for the Commissioner.