GREEN, Judge.
In the year 1905, plaintiff became the owner of a building site in the city of Detroit, on which, in 1906, he erected a hotel, and to this building several additions were made from time to time. In 1913, the plaintiff desired to construct an addition to the hotel, and, needing money for that purpose, created a corporation, named the Tuller Hotel Company, to which the hotel property was transferred. All the capital stock of this corporation was issued to plaintiff, except two snares that were issued in the name of two of his relatives to qualify them as directors. In 1914, the hotel company issued its bonds in the total sum of $650,000, of which $300,000 were still outstanding in 1922, when it was desired to build still another addition to the hotel. Additional funds were needed for that purpose, and arrangements were made with the Dime Savings Bank of Detroit whereby a loan of $2,000,000 was obtained by the corporation upon a bond issue, of that amount. In order to obtain this loan, the hotel company purchased from plaintiff three lots owned by him which were adjacent to the hotel and included in the properties which secured the payment of this bond issue. The purchase was made pursuant to a resolution adopted by the corporation providing for the purchase of these lots for the total sum of $500,000, for the payment of the lots from, the proceeds of the bond issue, and for crediting the [191]*191plaintiff on the books of the corporation with the price of the lots. Subsequently, and during the year 1922, the plaintiff withdrew from his account with the corporation various sums totaling $300,741.81.
Plaintiff’s income tax return for the calendar year 1922 disclosed a tax liability of $27,660.01. The Bureau of Internal Revenue assessed $28,222.10 on the return, which was paid by plaintiff. On November 2, 1923, plaintiff filed a claim for refund in the sum of $27,660.01 in which, among other things, he stated as the basis of his claim, “nontaxability of transfer of property to corporation of which taxpayer is sole owner.” In computing the tax of plaintiff for 1922, as finally determined, the government officials included as capital gain the sum of $230,000, treating it as profit derived by the sale to the Tuller Hotel Company of the three lots to which reference has been made above, the cost of said lots being determined to be $270,000 and the selling price $500,000, and the Commissioner assessed plaintiff’s taxes accordingly. Asserting that this action of the Commissioner was erroneous, plaintiff now seeks to recover the amount of taxes paid by reason thereof. More specifically stated, the plaintiff contends that under the law as it existed at the time the lots were transferred to the hotel company, there was no taxable gain in the transaction because he was the owner, and immediately thereafter in control of the corporation to which the transfer was made.
The question thus raised depends on the construction of section 202 of the Revenue Act of 1921 (42 Stat. 229), which, so far as material to the case before us, reads as follows:
“Sec. 202. (a) That the basis for ascertaining the gain derived or loss sustained from a sale or other disposition of property, real, personal, or mixed, acquired after February 28, 1913, shall be the cost of such property; except that—
“(c) For the purposes of this title, on an exchange of property, real, personal or mixed, for any other such property, no gain or loss shall be recognized unless the property received in exchange has a readily realizable market value; but even if the property received in exchange has a readily realizable market value, no gain or loss shall be recognized—* * *
“(3) When (A) a person transfers any property, real, personal or mixed, to a corporation, and immediately after the transfer is in control of such corporation.”
Plaintiff takes the last clause of (c), “no gain or loss shall be recognized,” joins it to that portion of (3) which is quoted above, and, reading these two provisions together, argues that they constitute a provision that no gain or loss shall be recognized in any transaction when a person transfers property to a corporation and immediately after the transfer is in control of such corporation. In other words, the plaintiff contends that these provisions apply to all transfers of every kind and description, even though the transfer be a sale and not an exchange, and made for cash or its equivalent.
The construction contended for by plaintiff would result in an exemption so inequitable and unjust as applied to cases like the one we have before us that we think no one would contend that Congress intended the act to be so applied. Plaintiff’s counsel call attention to the fact that the act was subsequently amended; that the committee report accompanying the amendment stated that it was thought that the act of 1921 was capable of the construction for which the plaintiff now contends, and should be amended as Congress obviously did not intend such a result. There are also some respectable authorities cited by plaintiff whose opinions appear to approve the construction placed upon the act by plaintiff. But in the consideration heretofore given this statute, it seems not to have been noticed that subdivisions (c) and (3) (A) cannot be separated from the preceding subdivision (a) which provides that the basis for ascertaining the gain derived from a sale or other disposition of property shall be the cost of such property except as stated in (c) that on an exchange of property no gain or loss shall be recognized when (3) (A) a person transfers property to a corporation and immediately after the transfer is in control of the corporation. In other words, the only exception to the rule laid down in (a) is made when there is an exchange of property. The transaction under consideration was not an exchange of property; it was a sale, as we have expressly found. It seems plain that if the language of the act be followed plaintiff’s contention cannot be sustained. The fact that the act was subsequently amended to make the construction so clear that there could be no dispute about it does not op[192]*192erate to sustain plaintiff’s contention. As the conclusion we have reached appears not to be in harmony with the opinions of some other courts, we prefer not to rest the judgment in the case upon it, but will consider defendant’s plea that the plaintiff’s cause of action is barred by the statute of limitations.
The defendant alleges that the plaintiff’s suit was not brought within the statutory time allowed after his claim for refund had been rejected. The original petition was filed October 29, 1931, and the original claim for refund was filed November 2, 1923. The claim was based, as before stated, on the allegation that the transfer of the lots to the hotel company was not taxable. After the claim was filed, the Bureau of Internal Revenue had an agent make a special audit of plaintiff’s books, which disclosed a deficiency of $3,-196.07, .and showed that in the computation of the tax the transaction which involved the sale of the lots was treated as a cash sale and a tax assessed on the profit derived. On September 10, 1924, the plaintiff was advised of the audit, also that the amount last mentioned had been assessed as a deficiency, and that his claim had been rejected. From then on until October 30, 1929, the plaintiff continued to protest against the action of the Commissioner in holding that he derived taxable gain from the sale of the three lots to the Tuller Hotel Company and insisted that the transaction was not in fact a sale and that the tax was wrongfully assessed against him.
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GREEN, Judge.
In the year 1905, plaintiff became the owner of a building site in the city of Detroit, on which, in 1906, he erected a hotel, and to this building several additions were made from time to time. In 1913, the plaintiff desired to construct an addition to the hotel, and, needing money for that purpose, created a corporation, named the Tuller Hotel Company, to which the hotel property was transferred. All the capital stock of this corporation was issued to plaintiff, except two snares that were issued in the name of two of his relatives to qualify them as directors. In 1914, the hotel company issued its bonds in the total sum of $650,000, of which $300,000 were still outstanding in 1922, when it was desired to build still another addition to the hotel. Additional funds were needed for that purpose, and arrangements were made with the Dime Savings Bank of Detroit whereby a loan of $2,000,000 was obtained by the corporation upon a bond issue, of that amount. In order to obtain this loan, the hotel company purchased from plaintiff three lots owned by him which were adjacent to the hotel and included in the properties which secured the payment of this bond issue. The purchase was made pursuant to a resolution adopted by the corporation providing for the purchase of these lots for the total sum of $500,000, for the payment of the lots from, the proceeds of the bond issue, and for crediting the [191]*191plaintiff on the books of the corporation with the price of the lots. Subsequently, and during the year 1922, the plaintiff withdrew from his account with the corporation various sums totaling $300,741.81.
Plaintiff’s income tax return for the calendar year 1922 disclosed a tax liability of $27,660.01. The Bureau of Internal Revenue assessed $28,222.10 on the return, which was paid by plaintiff. On November 2, 1923, plaintiff filed a claim for refund in the sum of $27,660.01 in which, among other things, he stated as the basis of his claim, “nontaxability of transfer of property to corporation of which taxpayer is sole owner.” In computing the tax of plaintiff for 1922, as finally determined, the government officials included as capital gain the sum of $230,000, treating it as profit derived by the sale to the Tuller Hotel Company of the three lots to which reference has been made above, the cost of said lots being determined to be $270,000 and the selling price $500,000, and the Commissioner assessed plaintiff’s taxes accordingly. Asserting that this action of the Commissioner was erroneous, plaintiff now seeks to recover the amount of taxes paid by reason thereof. More specifically stated, the plaintiff contends that under the law as it existed at the time the lots were transferred to the hotel company, there was no taxable gain in the transaction because he was the owner, and immediately thereafter in control of the corporation to which the transfer was made.
The question thus raised depends on the construction of section 202 of the Revenue Act of 1921 (42 Stat. 229), which, so far as material to the case before us, reads as follows:
“Sec. 202. (a) That the basis for ascertaining the gain derived or loss sustained from a sale or other disposition of property, real, personal, or mixed, acquired after February 28, 1913, shall be the cost of such property; except that—
“(c) For the purposes of this title, on an exchange of property, real, personal or mixed, for any other such property, no gain or loss shall be recognized unless the property received in exchange has a readily realizable market value; but even if the property received in exchange has a readily realizable market value, no gain or loss shall be recognized—* * *
“(3) When (A) a person transfers any property, real, personal or mixed, to a corporation, and immediately after the transfer is in control of such corporation.”
Plaintiff takes the last clause of (c), “no gain or loss shall be recognized,” joins it to that portion of (3) which is quoted above, and, reading these two provisions together, argues that they constitute a provision that no gain or loss shall be recognized in any transaction when a person transfers property to a corporation and immediately after the transfer is in control of such corporation. In other words, the plaintiff contends that these provisions apply to all transfers of every kind and description, even though the transfer be a sale and not an exchange, and made for cash or its equivalent.
The construction contended for by plaintiff would result in an exemption so inequitable and unjust as applied to cases like the one we have before us that we think no one would contend that Congress intended the act to be so applied. Plaintiff’s counsel call attention to the fact that the act was subsequently amended; that the committee report accompanying the amendment stated that it was thought that the act of 1921 was capable of the construction for which the plaintiff now contends, and should be amended as Congress obviously did not intend such a result. There are also some respectable authorities cited by plaintiff whose opinions appear to approve the construction placed upon the act by plaintiff. But in the consideration heretofore given this statute, it seems not to have been noticed that subdivisions (c) and (3) (A) cannot be separated from the preceding subdivision (a) which provides that the basis for ascertaining the gain derived from a sale or other disposition of property shall be the cost of such property except as stated in (c) that on an exchange of property no gain or loss shall be recognized when (3) (A) a person transfers property to a corporation and immediately after the transfer is in control of the corporation. In other words, the only exception to the rule laid down in (a) is made when there is an exchange of property. The transaction under consideration was not an exchange of property; it was a sale, as we have expressly found. It seems plain that if the language of the act be followed plaintiff’s contention cannot be sustained. The fact that the act was subsequently amended to make the construction so clear that there could be no dispute about it does not op[192]*192erate to sustain plaintiff’s contention. As the conclusion we have reached appears not to be in harmony with the opinions of some other courts, we prefer not to rest the judgment in the case upon it, but will consider defendant’s plea that the plaintiff’s cause of action is barred by the statute of limitations.
The defendant alleges that the plaintiff’s suit was not brought within the statutory time allowed after his claim for refund had been rejected. The original petition was filed October 29, 1931, and the original claim for refund was filed November 2, 1923. The claim was based, as before stated, on the allegation that the transfer of the lots to the hotel company was not taxable. After the claim was filed, the Bureau of Internal Revenue had an agent make a special audit of plaintiff’s books, which disclosed a deficiency of $3,-196.07, .and showed that in the computation of the tax the transaction which involved the sale of the lots was treated as a cash sale and a tax assessed on the profit derived. On September 10, 1924, the plaintiff was advised of the audit, also that the amount last mentioned had been assessed as a deficiency, and that his claim had been rejected. From then on until October 30, 1929, the plaintiff continued to protest against the action of the Commissioner in holding that he derived taxable gain from the sale of the three lots to the Tuller Hotel Company and insisted that the transaction was not in fact a sale and that the tax was wrongfully assessed against him. The Bureau held that these repeated protests were not well founded, and rejected the claim for refund because the “transfer was made for cash.” The plaintiff appears to have been first advised by letter dated September 10, 1924, that his claim for refund had been rejected; on March . 17, 1926, he was advised that this rejection was sustained; on November 26, 1926, he was again told that the rejection was sustained; on June 29, 1927, the Commissioner advised him that no further action would be taken; and, upon the matter being again taken up by a representative of the plaintiff, he was advised by the Commissioner on August 12, 1927, that every consideration had been given to the information submitted, that the tax liability before determined was correct, and that his request for reconsideration was denied. Whereupon, on January 30, 1929, the plaintiff’s representative filed an application for reopening of plaintiff’s claim setting out his contentions, and when the Commissioner advised him that his letters would be given consideration at the earliest practicable date, plaintiff then filed a supplemental claim increasing the amount of refund claimed.
On October 30, 1929, the Commissioner of Internal Revenue wrote the plaintiff a letter going into detail, which seems to us entirely unnecessary after what had occurred, and explaining at length why plaintiff’s claim had been rejected.
It is quite evident from what we have stated above that the plaintiff was not in any way misled and has received every consideration- on the part of the government officials. He now claims that because in the last communication from the department they took pains to explain to him at great length the reason why his claim had been rejected and his application for reconsideration denied, this action amounted to a reconsideration. The question of whether a claim has been reconsidered is .one of fact to be determined from all of the circumstances of the case. Plaintiff contends that some new reasons were given to show that the action theretofore taken by the Commissioner was incorrect, but no new facts had been presented, and if, in an endeavor to explain the situation fully, the Commissioner gave some additional reasons justifying his former rejection of the claim, his action in so doing was not a reconsideration of the claim. He was merely setting out the matters upon which he based his concluding statement, “In view of the foregoing the requests for the reopening of the claim are denied.” We have found as an ultimate fact from all of the evidence that plaintiff’s claim was not reconsidered in 1929. Plaintiff filed his petition October 29, 1931, just two years after he claims the reconsideration took place. As plaintiff’s claim for refund had been rejected several times in 1927 and in prior years, it is evident that it is barred by the statute of limitations.
It follows that plaintiff’s cause of action should be dismissed, and it is so ordered.