Court Opinion

ID: 4608651
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:43:07.627507+00
Date Added: 2024-06-11T07:53:44.618897
License: Public Domain

E. S. HASS, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Hass v. CommissionerDocket No. 14817.United States Board of Tax Appeals13 B.T.A. 1352; 1928 BTA LEXIS 3059; November 1, 1928, Promulgated *3059  1.  Certain amounts expended by the petitioner in the year 1921 in connection with the operation of his ranch, held to be properly deductible from gross income for that year.  2.  The petitioner sustained a loss in 1921 from the sale of a hardware business in which he was interested and the amount thereof should be deducted from gross income for that year.  Ralph Kohlmeier, Esq., for the petitioner.  Shelby S. Faulkner, Esq., for the respondent.  MARQUETTE *1352  This proceeding is for the redetermination of a deficiency in income tax asserted by the respondent for the year 1921 in the amount of $360.40.  The errors alleged are that the respondent failed to allow *1353  as deductions from gross income certain amounts which the petitioner claims he expended in operating two ranches owned by him, and the amount of $800 claimed as a loss on the sale of the business in which the petitioner owned an interest.  FINDINGS OF FACT.  The petitioner is and was during the year 1921 a resident of Downey, Calif.  He was during the year 1921, and had been for several years prior thereto, the owner of two ranches, one situated in Merced County, *3060  and the other in Tulare County, California.  Prior to 1920 these ranches were devoted to the raising of grain, but in that year the petitioner commenced setting fruit trees thereon with a view to the development of orchards.  This development work continued for several years.  In the year 1921 the petitioner expended for labor, repairs, insurance, and for other expenses in operating and developing these ranches, and for pastures which he rented, the amount of $3,006.32.  The petitioner operated the ranches with a view to profit.  In the year 1921 the petitioner agreed to purchase a one-half interest in the hardware business owned by one Meyers and to continue the business with Meyers as a partner, and also to conduct a Ford agency in conjunction therewith.  The petitioner was to pay for the one-half interest in the hardware business, one-half of its inventory value.  A few weeks later, and before the petitioner became actively engaged in the business, he and Meyers were notified by the Ford Motor Co. that the Ford agency could not be operated in connection with any other business.  In order therefore to continue the Ford agency it was necessary for the petitioner and Meyers to dispose*3061  of the hardware business, which they did at a loss of $2,400.  However, since the petitioner had been in the business a very short time, Meyers agreed to assume, and did assume, two-thirds of the loss from said sale.  The petitioner's loss on the transaction was $800.  In his income-tax return for 1921 the petitioner deducted $4,160.20 as the expense of operating his two ranches, and his loss on the sale of the hardware business.  The respondent disallowed the deduction.  OPINION.  MARQUETTE: We are satisfied that the petitioner acquired and operated his ranches with a view to profit and that he expended thereon during the year 1921 the amount of $3,006.32, which he is entitled to deduct in computing his net income for that year.  The evidence also convinces us that the petitioner sustained a loss of $800 from the sale of the hardware business which he purchased, *1354  or agreed to purchase from Meyers, and that he is entitled to a deduction in that amount.  Judgment will be entered under Rule 50.