Court Opinion

ID: 4627942
Source: CourtListenerOpinion
Date Created: 2020-11-21 03:02:19.447466+00
Date Added: 2024-06-11T07:57:07.942102
License: Public Domain

WILLIAM C. KING, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.King v. CommissionerDocket No. 6729.United States Board of Tax Appeals10 B.T.A. 308; 1928 BTA LEXIS 4144; January 27, 1928, Promulgated *4144  1.  The reasonable life of automobiles used in petitioner's trade or business and value of an automobile received as part payment for land, determined.  2.  Petitioner sold certain tracts of land, received substantial parts of the purchase price therefor, and delivered the deeds thereof and granted use and possession in the taxable year.  Held, that such sales were closed and completed transactions and that profits therefrom were income in such years.  3.  In the absence of evidence as to petitioner's method of keeping his books and making his income-tax returns, the determination of the respondent that a certain commission earned in the taxable year is income in such year is not disturbed.  William C. King pro se.  L. A. Luce, Esq., for the respondent.  LANSDON *308  The respondent has asserted a deficiency in income tax for the year 1920 in the amount of $1,338.20.  The petitioner alleges error: (1) In reducing depreciation on certain automobiles; (2) In overstating consideration received from the sale of a farm; (3) In allocating certain profits resulting from real estate sales to the taxable year instead of to the year 1921; and*4145  (4) In overstating amount of a certain commission received in the taxable year.  FINDINGS OF FACT.  The petitioner is an individual.  He resided in Scott City, Kans., during the taxable year, when he was a dealer in real estate on his own account and as an agent for others.  In January, 1920, the petitioner acquired two automobiles for use in his business, a Dodge and a Buick, at costs respectively of $1,325 and $1,600.  The Dodge car was used until about November 1, 1920, and was then traded in as part consideration for a new automobile.  The Buick car was used in the petitioner's business during the entire year.  These cars were in constant service and often were driven considerable distances over the country where there were no roads and at all times were operated by hired drivers.  A useful life of three years is a fair basis for the determination of reasonable depreciation on these automobiles.  Some time in the taxable year, the petitioner sold a tract of land and in part payment therefor received a Mitchell automobile of the sedan type, at a price of $2,700, as recited in the deed.  This was a used car when so received, and at that time had a value in money or money's*4146  worth of not more than $1,200, and a useful life of not more than three years.  *309  In the taxable year the petitioner sold two tracts of land for considerations which the parties agree resulted in gross profits in the respective amounts of $600 and $4,000.  In each of these deals there were deferred payments that were not received by the petitioner until some time subsequent to the taxable year, but the respective deeds were made, part of the purchase money for each tract was received, and possession and use were delivered in the taxable year.  On October 25, 1920, the petitioner, acting as agent for the owner, sold a tract of land and received for his services a commission in the amount of $800, of which $200 was paid in cash, $200 was due on January 1, 1921, and $400 on March 1, 1921.  OPINION.  LANSDON: The evidence indicates that the Dodge and Buick cars were subject to unusually hard usage.  The petitioner contends that 50 per cent is a reasonable rate of depreciation for such cars.  The respondent has allowed 25 per cent.  Witnesses who testified on this point confined themselves to opinions as to the cash or tradein value of the cars after use as described. *4147  The evidence does not fully support the claim of the petitioner and we have found that, in the circumstances, these cars and the Mitchell sedan received in trade in the same year had a useful life of three years when acquired.  We are convinced by the evidence that the Mitchell sedan received as part payment for a tract of land sold by the petitioner in the taxable year had an actual value in money, or money's worth, at date of the transaction of only $1,200.  The profits on this transaction should, therefore, be reduced by the amount of $1,500.  The only controversy as to profits on the two land sales in question is whether such transactions were completed in the taxable year or at some subsequent time.  The petitioner concedes that the deeds were given in the year 1920, and that he received substantial portions of the consideration in such year.  The evidence indicates that the vendees entered into possession and use in 1920.  In these circumstances we are of the opinion that each of such land deals was a closed and completed transaction in 1920 and that the profits therefrom were income for such year.  It is clear that only a part of the commission of $800 which the petitioner*4148  earned on October 25, 1920, was received in the taxable year, but inasmuch as the record does not disclose whether the books of the petitioner were kept and his income-tax returns made on the cash or the accrual basis, we approve the determination of the respondent on this issue.  Judgment will be entered on 10 days' notice, under Rule 50.