Court Opinion

ID: 4603007
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:31:02.2488+00
Date Added: 2024-06-11T07:52:46.236698
License: Public Domain

JOSEPH STULBERG, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Stulberg v. CommissionerDocket No. 10874.United States Board of Tax Appeals11 B.T.A. 463; 1928 BTA LEXIS 3798; April 10, 1928, Promulgated *3798  The fact that the property in question was "single purpose property" is not sufficient, in and of itself, to prove that it has no fair market value.  Harold V. Bradley, Esq., for the petitioner.  Frank S. Easby-Smith, Esq., for the respondent.  TRAMMELL *463  This is a proceeding for the redetermination of a deficiency in income tax for the calendar year 1920, in the amount of $8,670.44.  The questions involved are: (1) Whether the respondent erred in placing a fair market value of $30,000 in 1920 on property taken in as part of the purchase price of property sold by the petitioner in that year, (2) whether or not the Commissioner may "assert a different interpretation of the law than that followed by a taxpayer when the facts in question are fully and fairly set forth on taxpayer's return and assess additional tax based thereon at any time within the limit set forth in subdivision (d) of section 250 of the Revenue Act of 1918," or whether the respondent is "bound in any manner by the provisions of subdivision (b) of such section." FINDINGS OF FACT.  The petitioner is an individual residing in the City of Buffalo, N.Y.  On or about January 1, 1920, he*3799  purchased a certain piece of real estate known as Nos. 808-824 Main Street, in the City of Buffalo, *464  for the sum of $190,000.  On or about July 1, 1920, he sold said property to one John G. Sattler of Buffalo.  The consideration for such sale was cash and its equivalent in the amount of $224,520, and in addition another property known as the Broadway Theatre, which the respondent valued at $30,000 for the purpose of computing the amount realized from the said sale.  The building on the said real estate which was acquired in the transaction was erected for the sole use and purpose of a motion picture theatre.  This theatre was located at 512 Broadway Street, Buffalo.  On one side of it is a vacant lot, on the other side are some old houses, and across the street is the place of business of an ice company.  The theatre is approximately equidistant between two business sections of the city.  It is not in a good residential section nor in a good business section.  On the 1920 income-tax return of the petitioner there appears a note reading as follows: "Received in addition to the above purchase price the title to Broadway Theatre at 512 Broadway, Buffalo, New York, the*3800  value of which is undetermined until the same is sold.  I have had no offers for the same during the year 1920.  When I sell the theatre I will consider the purchase price paid as profit." The first communication of the Department to the petitioner advising him that there was anything wrong with his income-tax return was when the field auditor came to his place of business to make an audit.  OPINION.  TRAMMELL: In support of the contention of the petitioner that the Broadway Theatre, which was received as part of the purchase price of the property sold in 1920, did not have a fair market value of $30,000, the only testimony is that of the counsel for the petitioner.  He testified that he had been an attorney and a loan broker for about 15 years and as such was qualified to express an opinion as to whether the property had a market value or not.  He testified that it would not have a fair market value because and solely for the reason that it was a "single purpose" property, and that such property would not have a market value.  Counsel for the petitioner contended that it was not necessary "to prove that the property in question could not be sold readily for $30,000, nor for*3801  any other figure," nor was it "necessary to prove his (our) contention by direct evidence bearing upon the property in question and there is no difference between the 1918 and 1921 Revenue Acts with respect to the question here involved." The petitioner devoted a considerable portion of his brief in support of the proposition that the "readily realizable market *465  value" contained in section 202(c) of the Revenue Act of 1921, has the same meaning and effect as the "fair market value" contained in section 202(b) of the Revenue Act of 1918.  In view of the evidence in this case, however, we do not think it is necessary to discuss that question.  The petitioner in his brief stated: At no time has there been any attempt to prove that $30,000 was or was not a fair price for the property in question or that said price was too high or too low.  There has never been any attempt to prove that the taxpayer could not have readily realized $30,000 for the property in question on the open market and within a reasonable time.  This is still a matter of conjecture.  The taxpayer has always contended and still strenuously contends and has attempted to prove that if said price of $30,000*3802  was a fair price he would in all probability be unable to sell the same at that price, or in other words, there was no reasonable expectation that he would be able to find a purchaser willing to give a fair price for said building within a reasonable time after July 1, 1920.  We do not think that the statement of the witness that this property had no fair market value because in his opinion no "single purpose" property has a market value is sufficient to overcome the presumption of the correctness of the determination of the respondent.  With respect to the second question, that is, as to whether the Commissioner may "assert a different interpretation of the law than that followed by the taxpayer and assess an additional tax at any time within the limit set forth in subdivision (d) of section 250 of the Revenue Act of 1918" we are convinced that the respondent has all the time allowed him by statute to assert a deficiency and interpret the law and the facts differently from the interpretation placed thereon by the petitioner in his return.  The petitioner takes the position that section 250(b) of the Revenue Act of 1918 is a limitation upon section 250(d) and that since the respondent*3803  has not "as soon as practicable" after the return was filed examined it, he can not subsequently assert a deficiency, although his action is well within the period provided in section 250(d), that is, within five years after a return was due or filed.  While section 250(b) requires the Commissioner to examine the return as soon as practicable, section 250(d) prescribes the limitations within which he may determine and assess the tax.  There is no testimony here, however, that the respondent did not comply strictly with both subdivisions (b) and (d) of section 250.  Judgment will be entered for the respondent.