Court Opinion

ID: 4618132
Source: CourtListenerOpinion
Date Created: 2020-11-21 02:37:59.634313+00
Date Added: 2024-06-11T08:13:30.385566
License: Public Domain

T. J. LEWIS, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Lewis v. CommissionerDocket No. 9987.United States Board of Tax Appeals10 B.T.A. 536; 1928 BTA LEXIS 4083; February 6, 1928, Promulgated *4083  March 1, 1913, value of farm property determined.  South Trimble, Jr., Esq., for the petitioner.  R. H. Ritterbush, Esq., for the respondent.  SIEFKIN*536  This is a proceeding for the redetermination of a deficiency in income taxes for the year 1923 in the amount of $681.90.  It is alleged that the respondent erred in determining the taxable profit realized upon the sale of property which was purchased prior to March 1, 1913, in failing to determine the fair market value as of March 1, 1913.  FINDINGS OF FACT.  The petitioner is an individual residing in Frankfort, Ky.  The property in question is located one and three-fourths miles north of Frankfort in Franklin County, Kentucky, at the intersection of the Peach Mill and Owenton Turnpikes.  The property as purchased by the petitioner in 1906, for $7,500, contained 144.4 acres.  Thereafter, in 1908, 24.4 acres were sold to the City of Frankfort and the County of Franklin for about $1,500 - about $60 per acre.  When purchased by the petitioner the property was in a very dilapidated and worn-out condition.  It was not under cultivation, and only about one-half of it was covered by grass. *4084  It was partly covered with briars and buck brush, was washed in deep gullies, and the fences were covered up in bushes.  Immediately after acquiring the property the petitioner began to add to and improve it.  When purchased the property contained a comparatively new two-story frame house and a barn.  The petitioner built two more barns, two ponds for stock water, a concrete waterworks at a spring, and a concrete well with a force pump in it.  Petitioner cleared the land and grubbed it, put brush in the gullies and sowed rye, bluegrass, alsike, red clover and orchard grass.  The rye was allowed to fall down, and large herds of cattle were kept and fed upon the place.  The house was painted and rapered, buildings were covered, new fences were built, and a new gate was constructed.  On March 1, 1913, the property was in a good state of improvement and fertility, and taking into consideration its proximity to Frankfort and its residential value, was probably the most desirable property in that vicinity.  The petitioner continued to improve the property from the time it was acquired in 1906 until it was sold in 1923 for $25,000.  *537  The petitioner, in 1920, was offered $300*4085  per acre for such property by the party who bought it in 1923, but he refused to sell.  Petitioner also refused an offer of $20,000 for the property in 1917.  About 1910 or 1911 a farm of 70 or 80 acres, of which only about 50 per cent was tillable and which was located about a mile from Frankfort, was sold for $13,000.  A farm, located across the road from the petitioner's property was traded for other property in 1915 upon the basis of about eighty dollars per acre.  In 1914 a farm of 115 acres adjoining the property in question was sold for a total consideration of $6,833.50.  About 40 or 50 acres of this land is very rough and the house is about a quarter of a mile from the road.  A large hollow confronts the house.  This same property was sold in 1915 for $6,000.  A farm of 70 or 80 acres, located a little nearer Frankfort than the petitioner's property, was sold within a year or two of 1913 for $13,000.  In 1915 a farm of 109 acres, located a mile further from Frankfort than the property of the petitioner, was purchased for $90 per acre.  Between 1914 and 1917 a farm of 75 acres near the land in question was purchased for $70 per acre.  In 1912 about 150 acres of*4086  land near the land in question were sold for $61 or $62 per acre.  On February 28, 1912, a farm of 193 acres located about one and one-half miles from the property in question was sold for $9,000.  In 1913 the property of the petitioner, consisting of 120 acres, was assessed for county-tax purposes at $4,000.  The respondent, in computing the income-tax liability of the petitioner, allowed a value of $100 per acre for the property as of March 1, 1913.  OPINION.  SIEFKIN: The sole issue in this proceeding is the value as of March 1, 1913, of the property of the petitioner which was sold in 1923 for $25,000.  This property consisted of 120 acres of farm land.  In computing the income-tax liability of the petitioner for the calendar year 1923, the respondent allowed a value of $100 per acre for the property as of March 1, 1913, and the petitioner contends that the fair market value at that time was $25,000, or about $200 an acre.  The opinion evidence in the case differs widely with regard to the value.  Some witnesses testified that the value as of March 1, 1913, was the same as the value in 1923, the time the property was sold.  Others, basing their opinion upon sales of*4087  land in the vicinity, stated the value of the property as of March 1, 1913, at figures ranging from $100 to $175 per acre.  The property in question was assessed for county-tax purposes at $4,000 in 1913.  *538  It was shown that the property of the petitioner was probably the most desirable in the vicinity, since it had advantages as a home and for agricultural purposes, and was highly improved by March 1, 1913.  The opinions of witnesses for the respondent ranged from $100 per acre to $140 per acre, while the opinions of the petitioner's witnesses ranged from $100 per acre to $200 per acre.  Considering all the evidence in the proceding, and acting as we deem a jury would act in such circumstances, we find that the fair market value of the 120 acres on March 1, 1913, was $145 per acre.  Judgment will be entered upon 15 days' notice under Rule 50.