BOOTH, Circuit Judge.
This is a petition to review an order of the Board of Tax Appeals which redetermined the deficiency of the petitioner’s income tax for the year 1925. The facts loading up to the order are substantially as follows: Petitioner is a resident of Duluth, Minn. November 4, 1918, his wife died testate, leaving an estate which included among [468]*468its assets 827 shares of the capital stock of the Red Cliff Land & Lumber Company, Limited (herein called the Red Cliff Company), of which the petitioner received as his share 275% shares. The Red Cliff Company prior to April, 1918, was the owner of large timber tracts in Canada. At that time it sold its holdings to the Alberni-Pacific Lumber Company, Limited (herein called the Alberni-Pacific Company), in exchange for 24,000 shares of the latter’s capital stock; and these shares constituted the assets of the Red Cliff Company on November'4, 1918. The Alberni-Pacific Company acquired and owned a logging plant, for which it issued 6,000 shares of its capital stock. These land holdings and this logging camp constituted the assets of the Alberni-Pacific Company. At the time of the death of Mrs. Williams the capital stock of the Red Cliff Company had no market value; but the probate court of St. Louis county, Minn., in the administration of the estate found that the stock of the Red Cliff Company was worth $194.64 a share. This finding was based upon an appraisal made by two appraisers appointed by said probate court, and the appraisal was based, in part at least, upon reports which had been made by cruisers and engineers of the company.
This valuation of the stock of the Red Cliff Company was adopted by the executors of the will of Mrs. Williams in making their return of the value of the stock for federal estate tax purposes.
The shares which the petitioner received of the Red Cliff Company he surrendered later to the liquidating committee of that company, and received in exchange 1,653 shares of the stock of the Albemi-Paeifie Company. In 1925 the petitioner sol<| all his shares of this stock for $131,413.50, of which'$69,426 was paid in cash, and $61,987.50 was paid in |>onds of the purchasing corporation. The face value of the bonds was $68,875. The purchasing corporation was the new Alberni-Pacifie Company, and had been organized to take over the properties of the old company of that name.
The petitioner in making his income tax return for the year 1925 set up the cost of the stock of the Red Cliff Company on the basis of the 1918 appraised value above given, and on this basis the sale in 1925 reflected a gain of $69,426. An amended return was put in by the petitioner, in which he set up the cost of the Red Cliff stock on a different basis; and on this amended basis the sale in 1925 reflected a loss of $22,067.55; and he accompanied his amended return with a claim for refund in the amount of the difference between the income tax as shown by the original return and as shown by the amended return. The amount of this difference was $4,497.17. This claim was disallowed by the commissioner, and a deficiency in the income tax of petitioner was found in the sum of $346.59. This conclusion of the commissioner was affirmed by the Board of Tax Appeals. The present appeal followed.
One of the contentions of petitioner is that the Board of Tax Appeals failed to make any finding as to the fair market value of the stock of the Red Cliff Company in 1918, the date when petitioner acquired it, and that therefore there is no basis for the order made by the board redetermining the deficiency.
We think this contention cannot be sustained. It is true that the Board of Tax Appeals in its findings of fact does not state specifically that the fair market value of the stock of the Red Cliff Company in November, 1918, was $194.64 per share. But it does find that this was the valuation fixed by the probate court in accordance with the laws of the state of Minnesota for estate and inheritance tax purposes, and that this figure was adopted by the executors of the estate in making return for federal estate tax purposes. It also redetermines the tax deficiency at exactly the same figure as the commissioner, who had adopted the valuation above mentioned and had based his deficiency figure thereon. Under these circumstances we think it would be hypercritical to hold that the Board of Tax Appeals had made no finding of valuation of the stock.
But this is not all.. Article 1594(b) of Regulation No. 65 (October 6, 1924) of the Treasury Department relating to income tax-reads, in part, as follows:
“In the case of property acquired by bequest, devise, or inheritance its value as appraised-for the purpose of the Federal Estate tax or in the ease of estates not subject to that tax, its value as appraised in the State court for the purpose of State inheritance taxes shall be deemed to be its fair market value when acquired.”
These regulations have the force and effect of law when not in conflict with statutory provisions on the same subject-matter. United States v. Eaton, 144 U. S. 677, 12 S. Ct. 764, 36 L. Ed. 591; United States v. Grimaud, 220 U. S. 506, 31 S. Ct. 480, 55 L. Ed. 563; Maryland Cas. Co. v. United States, 251 U. S. 342, 349, 40 S. Ct. 155, 64 L. Ed. [469]*469297; Daeuffer-Lieberman Brewing Co. v. United States (C. C. A.) 36 F.(2d) 568.
In the case at bar we find no conflict between the regulation quoted and the statutory provision, section 204(a)(5) of the Revenue Act of 1926, 26 USCA § 935(a)(5) reading as follows:
“Sec. 204. (a) The basis for determining the gain or loss from the sale or other disposition of property acquired after February 28, 1913, shall be the cost of such property ; except that —
“(5) If the property was acquired by bequest, devise, or inheritance, the basis shall be the fair market value of such property at the time of such acquisition.”
Giving effect, therefore, to the regulation provision, it is clear that the finding of the Board of Tax Appeals relative to the appraised value of the stock for the purpose of the federal estate tax is a finding of its fair market value when acquired by appellant.
Another contention of petitioner is that the Board of Tax Appeals in making its findings and conclusions proceeded on an erroneous theory of law, viz.: That the hoard was bound to approve the valuation of the commissioner unless the presumption in favor of its correctness was overcome by convincing proof by the petitioner.
We shall not undertake to follow counsel for petitioner in their discussion as to the theoretical status of presumptions in the law of evidence. It will suffice to ascertain whether the rulings and action of the Board of Tax Appeals relative to the evidence in the instant case were in accord with well-established principles.
Rule 30 of the Board of Tax Appeals reads as follows:
“Burden of Proof.- — The burden of proof shall be upon the petitioner, except that in respect of any new matter of fact pleaded in his answer, it shall be upon the respondent.”
This rule has been enforced by the board in numerous cases. Appeal of J. M. Lyon, 1 B. T. A. 378; Helen Pitts Parker v. Com’r of Internal Revenue, 14 B. T. A. 1185, 1197. And similar holdings have been made by the courts.
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BOOTH, Circuit Judge.
This is a petition to review an order of the Board of Tax Appeals which redetermined the deficiency of the petitioner’s income tax for the year 1925. The facts loading up to the order are substantially as follows: Petitioner is a resident of Duluth, Minn. November 4, 1918, his wife died testate, leaving an estate which included among [468]*468its assets 827 shares of the capital stock of the Red Cliff Land & Lumber Company, Limited (herein called the Red Cliff Company), of which the petitioner received as his share 275% shares. The Red Cliff Company prior to April, 1918, was the owner of large timber tracts in Canada. At that time it sold its holdings to the Alberni-Pacific Lumber Company, Limited (herein called the Alberni-Pacific Company), in exchange for 24,000 shares of the latter’s capital stock; and these shares constituted the assets of the Red Cliff Company on November'4, 1918. The Alberni-Pacific Company acquired and owned a logging plant, for which it issued 6,000 shares of its capital stock. These land holdings and this logging camp constituted the assets of the Alberni-Pacific Company. At the time of the death of Mrs. Williams the capital stock of the Red Cliff Company had no market value; but the probate court of St. Louis county, Minn., in the administration of the estate found that the stock of the Red Cliff Company was worth $194.64 a share. This finding was based upon an appraisal made by two appraisers appointed by said probate court, and the appraisal was based, in part at least, upon reports which had been made by cruisers and engineers of the company.
This valuation of the stock of the Red Cliff Company was adopted by the executors of the will of Mrs. Williams in making their return of the value of the stock for federal estate tax purposes.
The shares which the petitioner received of the Red Cliff Company he surrendered later to the liquidating committee of that company, and received in exchange 1,653 shares of the stock of the Albemi-Paeifie Company. In 1925 the petitioner sol<| all his shares of this stock for $131,413.50, of which'$69,426 was paid in cash, and $61,987.50 was paid in |>onds of the purchasing corporation. The face value of the bonds was $68,875. The purchasing corporation was the new Alberni-Pacifie Company, and had been organized to take over the properties of the old company of that name.
The petitioner in making his income tax return for the year 1925 set up the cost of the stock of the Red Cliff Company on the basis of the 1918 appraised value above given, and on this basis the sale in 1925 reflected a gain of $69,426. An amended return was put in by the petitioner, in which he set up the cost of the Red Cliff stock on a different basis; and on this amended basis the sale in 1925 reflected a loss of $22,067.55; and he accompanied his amended return with a claim for refund in the amount of the difference between the income tax as shown by the original return and as shown by the amended return. The amount of this difference was $4,497.17. This claim was disallowed by the commissioner, and a deficiency in the income tax of petitioner was found in the sum of $346.59. This conclusion of the commissioner was affirmed by the Board of Tax Appeals. The present appeal followed.
One of the contentions of petitioner is that the Board of Tax Appeals failed to make any finding as to the fair market value of the stock of the Red Cliff Company in 1918, the date when petitioner acquired it, and that therefore there is no basis for the order made by the board redetermining the deficiency.
We think this contention cannot be sustained. It is true that the Board of Tax Appeals in its findings of fact does not state specifically that the fair market value of the stock of the Red Cliff Company in November, 1918, was $194.64 per share. But it does find that this was the valuation fixed by the probate court in accordance with the laws of the state of Minnesota for estate and inheritance tax purposes, and that this figure was adopted by the executors of the estate in making return for federal estate tax purposes. It also redetermines the tax deficiency at exactly the same figure as the commissioner, who had adopted the valuation above mentioned and had based his deficiency figure thereon. Under these circumstances we think it would be hypercritical to hold that the Board of Tax Appeals had made no finding of valuation of the stock.
But this is not all.. Article 1594(b) of Regulation No. 65 (October 6, 1924) of the Treasury Department relating to income tax-reads, in part, as follows:
“In the case of property acquired by bequest, devise, or inheritance its value as appraised-for the purpose of the Federal Estate tax or in the ease of estates not subject to that tax, its value as appraised in the State court for the purpose of State inheritance taxes shall be deemed to be its fair market value when acquired.”
These regulations have the force and effect of law when not in conflict with statutory provisions on the same subject-matter. United States v. Eaton, 144 U. S. 677, 12 S. Ct. 764, 36 L. Ed. 591; United States v. Grimaud, 220 U. S. 506, 31 S. Ct. 480, 55 L. Ed. 563; Maryland Cas. Co. v. United States, 251 U. S. 342, 349, 40 S. Ct. 155, 64 L. Ed. [469]*469297; Daeuffer-Lieberman Brewing Co. v. United States (C. C. A.) 36 F.(2d) 568.
In the case at bar we find no conflict between the regulation quoted and the statutory provision, section 204(a)(5) of the Revenue Act of 1926, 26 USCA § 935(a)(5) reading as follows:
“Sec. 204. (a) The basis for determining the gain or loss from the sale or other disposition of property acquired after February 28, 1913, shall be the cost of such property ; except that —
“(5) If the property was acquired by bequest, devise, or inheritance, the basis shall be the fair market value of such property at the time of such acquisition.”
Giving effect, therefore, to the regulation provision, it is clear that the finding of the Board of Tax Appeals relative to the appraised value of the stock for the purpose of the federal estate tax is a finding of its fair market value when acquired by appellant.
Another contention of petitioner is that the Board of Tax Appeals in making its findings and conclusions proceeded on an erroneous theory of law, viz.: That the hoard was bound to approve the valuation of the commissioner unless the presumption in favor of its correctness was overcome by convincing proof by the petitioner.
We shall not undertake to follow counsel for petitioner in their discussion as to the theoretical status of presumptions in the law of evidence. It will suffice to ascertain whether the rulings and action of the Board of Tax Appeals relative to the evidence in the instant case were in accord with well-established principles.
Rule 30 of the Board of Tax Appeals reads as follows:
“Burden of Proof.- — The burden of proof shall be upon the petitioner, except that in respect of any new matter of fact pleaded in his answer, it shall be upon the respondent.”
This rule has been enforced by the board in numerous cases. Appeal of J. M. Lyon, 1 B. T. A. 378; Helen Pitts Parker v. Com’r of Internal Revenue, 14 B. T. A. 1185, 1197. And similar holdings have been made by the courts. Brown v. Com’r (C. C. A.) 22 F. (2d) 797; Avery v. Com’r (C. C. A.) 22 F. (2d) 6, 55 A. L. R. 1277; Bishoff v. Com’r (C. C. A.) 27 F. (2d) 91; Coon Auto Co. v. Com’r, 35 F.(2d) 504 (C. C. A. 8); Wickwire v. Reinecke, 275 U. S. 101, 48 S. Ct. 43, 72 L. Ed. 184; Reinecke v. Spalding, 280 U. S. 227, 50 S. Ct. 96, 74 L. Ed. 385.
The presumption in favor of the commissioner’s finding may be overcome by evidence. Walter R. McCarthy, Ex’r, v. Com’r of Internal Revenue, 9 B. T. A. 525; United States v. Rindskopf, 105 U. S. 418, 26 L. Ed. 1131; Wickwire v. Reinecke, supra; Reinecke v. Spalding, supra; Coon Auto Co. v. Com’r, supra; Fidelity & Columbia Tr. Co. v. Lucas (D. C.) 7 F.(2d) 146.
The value at which securities are returned for estate tax purposes is prima facie the value for the purpose of computing gain or loss on subsequent sale. Article 1594(c) of Regulations No. 65, supra; Appeal of Elizabeth J. Bray, 4 B. T. A. 42.
With these principles in mind, let us examine the procedure in the case at bar. Petitioner offered a considerable amount of evidence in an endeavor to prove that the fair market value of the Red Cliff Company stock in November, 1918, was greater than $194.64 per share. The appraisers in the probate court in arriving at this value per share of stock had used as a basis stumpage value of the timber owned by the Red Cliff Company at $1 per thousand. The evidence introduced by petitioner before the Board of Tax Appeals was almost. entirely directed to the stumpage value of the timber in November, 1918. Testimony of experts in the lumber business was received tending to show that the stumpage value was as high as $2 per thousand. This testimony of the experts was of two kinds: (1) Their opinions based upon their personal knowledge of the timber on the lands in question or nearby lands; (2) their opinions based upon an alleged sale in 1911 of the timber on the very lands in question, and their knowledge of any changes in value between 1911 and 1918.
It is the contention of petitioner that all of this expert testimony was stricken from consideration or held to be of no weight by the Board of Tax Appeals on the erroneous legal theory above mentioned. We think the record does not bear out this contention. We find nothing in the opinion of the Board of Tax Appeals or elsewhere in the record to indicate that the expert testimony of the first class was not considered and given due weight. As to the expert testimony of the second class, there are expressions in the opinion of the Board of Tax Appeals which indicate that it was accorded but little, if any, weight. Such ruling, if one was made, was not without reasonable basis. In the first place, the sale was remote — seven years prior to the date at which the valuation was to he fixed. This infirmity was attempted to be [470]*470cured by testimony that the value of stump-age had changed little, if any, during the seven-year period. In the second place, the alleged sale itself was of doubtful character. While sales of land are not infrequently held to be evidence of value of the land, the sales so contemplated are completed sales, i. e., where the consideration is paid. In the sale in question the consideration was only partly paid and the purchase contract was then abandoned by both parties. Such a situation has many of the infirmities of a mere offer to buy. See Sharp v. United States, 191 U. S. 341, 24 S. Ct. 114, 48 L. Ed. 211.
In addition to all this, it must be borne in mind that this method of ascertaining the value of the stock of the Red Cliff Company was at best an indirect one. The testimony thus offered was not as to the value, of the stock, but as to the value of the assets of the corporation which had issued the stock. The value per share of corporate stock can seldom be found by dividing the value of the assets by the number of shares. Many other considerations enter; among them, the liabilities, the outstanding contractual obligations, the character of the management, whether the market for such assets is active, sluggish, or sporadic. In view of these uncertain elements, not rendered certain by any evidence on the part of petitioner, and in view of the very doubtful probative value of the alleged sale and the testimony of the experts based thereon, we think it was not reversible error on the part of the Board of Tax Appeals to exclude such evidence from consideration.
Another contention of petitioner is that the introduction of any substantial evidence by petitioner caused the presumption in favor of the commissioner’s finding to disappear, and that apart from this presumption there was nothing on which to base the findings and conclusion of the Board of Tax Appeals. We think this contention is based upon a misapprehension of the evidence contained in the record. There was evidence before the board tending to establish the fact that a valuation had been fixed on the stock of the Red Cliff Company by the probate court in 1918 after an appraisal; tending to establish the further fact that this valuation had been adopted by the petitioner in making return for the federal estate tax on his wife’s estate; tending to establish the-further fact that the valuation so fixed was correct according to the best of petitioner’s judgment in 1918. This was substantial evidence and was considered by the Board of Tax Appeals along with the other evidence not excluded. The view of the board after such consideration is thus expressed in the opinion filed:
“On the whole, the evidence before the Board tends to support the findings of the Probate Court as being the nearest approach to a true valuation for said stock on November 4, 1918, that could be made under conditions existing at that time. The action of the respondent in respect of his determination of the value of this stock is approved.”
It is the well-established rule that if there is any substantial evidence to support a finding of the Board of Tax Appeals, such finding will not be disturbed. The following cases announce the rule in the Eighth Circuit: Mastin v. Com’r (C. C. A.) 28 F.(2d) 748; Denver Live Stock Comm. Co. v. Com’r (C. C. A.) 29 F.(2d) 543; Kendrick Coal & Dock Co. v. Com’r (C. C. A.) 29 F.(2d) 559; Conklin-Zonne-Loomis Co. v. Corner (C. C. A.) 29 F.(2d) 698; Feeders’ Supply Co. v. Com’r (C. C. A.) 31 F.(2d) 274; Powers Mfg. Co. v. Com’r (C. C. A.) 34 F.(2d) 255.
Error is also assigned as to the exclusion of certain testimony by the witness Scanlon. This matter is not properly before us for consideration, inasmuch as no offer to prove was made. Such offer was necessary whether we give effect to the rule of evidence apparently governing the Board of Tax Appeals (Revenue Act 1926, § 907(a), 26 USCA § 1219(a); McCurley v. Nat. Sav. & Tr. Co., 49 App. D. C. 10, 258 F. 154), or to the rule in this circuit [Federal Sur. Co. v. Standard Oil Co. (C. C. A.) 32 F.(2d) 119], Furthermore, later in the trial the witness Scanlon was allowed to answer questions of the same general import.
Petitioner finally contends that the Board of Tax Appeals erred in its method of computing the sales price of the stock of petitioner in the Red Cliff Company. The board held that the “sales price” was the value of the bonds and cash received; that the “cost” of the stock was the fair market value in November, 1918; that the gain was the difference between the two, but that the gain to be recognized was limited by the amount of cash received in accordance with section 203(d) (1) of the Revenue Act of 1926, 26 USCA § 934(d) (1), reading as follows :
“Sec. 203. * * * (d)(1) If an ex-, change would be within the provisions of paragraph (1), (2), or (4) of subdivision (b) if it were not for the fact that the property received in exchange consists not only of property permitted by such paragraph to be re[471]*471ceived without the recognition of gain, but also of other 'property or money, then the gain, if any, to the recipient shall bo recognized, but in an amount not in excess of the sum of such money and the fair market value of such other property.”
The petitioner argues that in computing the “sales price” the value of the bonds received should be entirely eliminated, because under the statute if petitioner had exchanged his stock solely for bonds no gain or loss could be recognized, as provided by section 203(b) (2), 26 USCA § 934(b) (2) reading as follows:
“Sec. 203. * * * (b) * * * (2) No gain or loss shall be recognized if stock or securities in a corporation a party to a reorganization are, in pursuance of the plan of reorganization, exchanged solely for stock or securities in such corporation or in another corporation a party to the reorganization.”
And that paragraph (d)(1) of the' same section is to be construed in harmony with paragraph (b)(2); and when so construed it means that “no gain shall be recognized to the' extent of ‘property’ received which is permit-ted by that paragraph, but if ‘other property’ or money is also received then a gain shall be recognized in respect of such ‘other property’ and money.”
We think this argument of petitioner is based upon a confusion of the statutory provisions relating to the computing of gain or loss with the provisions relating to the recognizing of gain or loss. The sections establishing the method of computing the gain or loss are sections 202 and 204 (26 USCA §§ 933, 935). Whether such gain or loss shall be recognized after it has been computed, and to what exent, depends upon section 203 (26 USCA § 934), the opening sentence of which reads:
“(a) Upon the sale or exchange of property the entire amount of the gain or loss, determined under section 202, shall bo recognized, except as hereinafter provided in this section.”
Certain parts of section 203 provide that no gain or loss shall be recognized in specified cases, e. g., subdivision (b) paragraphs (1) , (2), (3), (4), (5); subdivision (c); subdivision (e) paragraph (1). Other parts of section 203 provide that a portion only of the gain shall be recognized, e. g., subdivision (b) paragraph (5); subdivision (d) paragraphs (1), (2); subdivision (e) paragraph (2) . Subdivision (f) provides for cases in which no loss shall he recognized, additional to the cases covered by subdivision (b) paragraphs (1), (2), (3), (4), (5). In none of these subdivisions [(b), (e), (d), (e), (f)] of section 203, however, is there any method provided or suggested for ascertaining gain or loss other than the method provided in sections 202 and 204.
The language of these two sections is simple. Section 202 (26 USCA § 933) so far as here material, reads as follows:
“Sec. 202. (a) Except as hereinafter provided in this section, the gain from the sale or other disposition of property shall be the excess of the amount realized therefrom over the basis provided in subdivision (a) or (b) of section 204, and the loss shall be the excess of such basis over the amount realized. * * *
“(c) The amount realized from the sale or other disposition of property shall be the sum of any money received plus the fair market value of the property (other than money) received.”
Section 204 (26 USCA § 935), so far as hero material, reads as follows: ¡
“Sec. 204. (a) The basis for determining the gain or loss from the sale or other disposition of property acquired after February 28, 1913, shall be the cost of such property; except that— * * *
“(5) If the property was acquired by bequest, devise, or inheritance, the basis shall be the fair market value of such property at the time of such acquisition.”
And as if to set at rest the proposition that section 203 relates solely to the recognition of gain or loss and not to the determination or computation thereof, section 202(d), 26 USCA § 933(d) provides:
“(d) In the case of a sale or exchange, the extent to which the gain or loss determined under this section shall be recognized for the purposes of this title, shall be determined under the provisions of section 203.” (Italics ours.)
We think the Board of Tax Appeals correctly computed the gain in accordance with the provisions of sections 202 and 204, and correctly limited the gain to be recognized as taxable in accordance with the provisions of section 203(d) (1). There is no showing that petitioner was taxed on any gain in excess of the cash received.
Our conclusion is that the order of redetermination of the Board of Tax Appeals should be affirmed, and it is so ordered.