Court Opinion

ID: 6873255
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:04:14.24165+00
Date Added: 2024-06-11T16:05:26.317370
License: Public Domain

SIBLEY, Circuit Judge
(dissenting).
Because market value is a matter of fact, even of opinion when the identical thing was not bought and sold at the critical time, and because the Board of Tax Appeals acted on the evidence which the taxpayer furnished to it in a lawful way, I think its judgment ought to be affirmed. Elmhurst Cemetery Co. v. Commissioner, 300 U.S. 37, 57 S.Ct. 324, 81 L.Ed. 491. In the case cited the Supreme Court upheld a fair average value put by the Board on a tract of thirty-seven acres from which cemetery lots had been sold prior to March 1, 1913. It laid down no rule as to how unsold and presently unsalable lots are to be appraised. The Board so interpreted the case in its recent decision of The Evergreens v. Commissioner, - B.T.A. -. The same Commissioner who spoke for the Board in the present case there set forth, I think very clearly and reasonably, the considerations which ought in such a case to be weighed. The Board there rejected the complicated mathematical calculations of the taxpayer, as here it rejected those of the Commissioner, and in both cases looked sensibly to the record of sales in the past and the prospect of sales in the future, and fixed what it thought an average fair market price for the unsold land on March 1, 1913. In that case it was said: “We also think that some consideration should be given to the undisputed fact that many years must pass before petitioner’s property will be sold out.” That consideration and the cost of additional improvement I understand to be what the Board means by “discount factors” in its present decision. It said: “On the established facts of actual sales and sales prices, and applying to them what appear to be reasonable discount factors based on the probable period required to sell out the two areas and the cost of completing the development of the semi-improved *718area, we have concluded that on March 1st, 1913, the fair market value of the improved area was fifty-eight cents per square foot, and that of the semi-improved area was ten cents per square foot.” According to the taxpayer’s evidence, the actual sales of lots for burial purposes in 1912 averaged 85 cents per square foot. The unsold land in the improved area was unsold because there was no present demand for it, and while according to the past experience some would be sold at the same or a better price in 1913, much of it would have to wait twenty or thirty years or more to find a sale. The semi-improved area would have to wait much longer, and would have also to be further improved. The Board thought on this account that the unsold land, since no one could tell which particular lots from it would be soon sold and which would have to wait, could only be dealt with in an average way, and they reduced or discounted the average price of 85 cents got for that last sold by 17 cents to make 58 cents per square foot, which is a discount of 20 per cent. They reduced or discounted the fair value of the semi-improved area much more because it would probably have to wait much longer and would have to have money spent on it to sell at all. Whether ■these reductions were in fact correct in amount is a question not our province to decide, being a fact question. What was done was not arbitrary and without the support of evidence, but was based on the sales experience of the past and the prospects for the future. It was not a failure to value the very lots sold in 1930 and 1931, as the majority opinion states, but was an average s'quare foot value put on that same land because, not being prophets, humans could not in March, 1913, tell which particular land would sell soon or late. The semi-improved area in 1913 had not been laid off into lots at all, and there is nothing to show that the improved area had been. I understand that a purchaser bought as much as he wished at so much per square foot. Moreover, the Board dealt with the matter as the taxpayer presented it. The taxpayer asserts in the petition for review that on March 1, 1913, its land stood classified as “improved, consisting of fully developed and salable area and semi-improved * * * at that time partially developed but expected to be fully developed.” The evidence followed that distinction and dealt only with square foot values. Some of the lots sold in 1930 and 1931 came from one area and some from the other. Hence the necessity of fixing the average square foot value March 1, 1913, of each area.
If the majority opinion means, as I think it does, that the Board must value all land in the improved area at what just previously some like land had sold for without any reduction for probable delay in sale, I earnestly dissent. That idea would obtain for goods or land for which there is a general market, but not for superabundant cemetery lots the demand for which is limited by deaths and prospective deaths in the community. They cannot be used for any other purpose, and when the present demand is satisfied the seller must wait.
The fair market value as of March 1, 1913, for which we are searching is the statutory substitute for the usual cost basis in determining gain on a sale. If this taxpayer had bought the cemetery on March 1, 1913, a proportional part of what was then paid would be the cost basis for the lots sold, in 1930 and 1931. The fair market value for which we are inquiring, since there was no purchase then, is what the taxpayer or another would reasonably have paid if there had been a purchase on that date. It is very manifest to me that no purchaser would have bought even the improved area at the price per square foot at which some lots from it were retailed. He would know that one must wait many years for a réturn of his money, and would therefore offer much less. The Board has only attempted to do what any purchaser would have done in figuring on a purchase of this property as cemetery lots in 1913. There is nothing unlawful or unreasonable in it, and by consequence nothing that this court can reverse.