Court Opinion

ID: 4628595
Source: CourtListenerOpinion
Date Created: 2020-11-21 03:03:40.412407+00
Date Added: 2024-06-11T08:00:04.893875
License: Public Domain

TABOR MANUFACTURING CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Tabor Mfg. Co. v. CommissionerDocket No. 11589.United States Board of Tax Appeals10 B.T.A. 1197; 1928 BTA LEXIS 3932; March 7, 1928, Promulgated *3932  The Commissioner's determination of the March 1, 1913, value of property approved.  W. Hampton Todd, Esq., for the petitioner.  Brice Toole, Esq., for the respondent.  LITTLETON*1197  The Commissioner determined a deficiency in income and profits tax of $866.55 for the year 1920.  The petitioner admits that $192.65 of the deficiency is justly due.  The issue is the March 1, 1913, value of certain land acquired in 1910, and sold at an advance in 1920.  The evidence consists of admissions of the Commissioner in his answer and certain admissions and stipulations made at the hearing.  FINDINGS OF FACT.  The petitioner is a Pennsylvania corporation, with its principal office in the City of Philadelphia.  In July, 1910, the petitioner purchased about five acres of land located in Ward 38 of the City of Philadelphia, at a cost of $55,787.93.  The land was part of a considerable tract lying in a manufacturing neighborhood and was unimproved.  It was sold in the year 1920 for $119,689.50.  A profit of $46,925.24 was reported by the petitioner from the sale, on the basis of March 1, 1913, value of $72,408.72, which petitioner determined by ratably*3933  apportioning the excess of the selling price over the cost to the period prior to March 1, 1913, that is, from 1910 to 1913, on the theory that the increase in value of the land was the same in each year from 1910 to 1920.  The respondent refused to approve the method used by the petitioner, and determined the March 1, 1913, value of the property to be $65,924.73, based on the proportionate increase for local taxation assessments, the assessment being $20,732.80 in 1910, when the land was purchased, and $24,500 in 1913.  Upon this determination the Commissioner computed a gain of $53,409.23, upon which the deficiency was determined.  OPINION.  LITTLETON: Rule 30 of the Board's rules of practice and procedure provides: The burden of proof shall be upon the petitioner, except that in respect of any new matter of fact pleaded in his answer, it shall be upon the respondent.  *1198  No evidence was introduced by the petitioner to show the fair market price or value of the property in question on March, 1, 1913, or that the property had during the time of ownership by the petitioner remained in an unchanged condition, or that any increase in value had been gradual and the*3934  same each year during the ownership from 1910 to 1920.  The Commissioner's determination of value on March 1, 1913, is prima facie correct, and will not be rejected by the Board in the absence of competent proof to show that it is erroneous.  The Commissioner has admitted that petitioner arrived at its March 1, 1913, value by ratably applying the difference between the cost and the sales price of the property to the period from 1910 to March 1, 1913, but he did not admit that the increase in value from 1910 to 1920 was the same in each year, and he expressly denied that the March 1, 1913, value was in the amount claimed by petitioner.  This Board is not setting up a reassessment of tax; its function is to determine upon the evidence submitted in each proceeding whether the Commissioner has erred in the particulars alleged by the taxpayer.  Petitioner has failed to establish by competent evidence under section 1000 of the Revenue Act of 1926, amending section 907(a) of the Revenue Act of 1924, that the fair market price or value of the property in question on March 1, 1913, was $72,408.72, instead of $65,924.73 as determined by the Commissioner.  It is not a question whether the method*3935  used by the petitioner or by the Commissioner in determining the March 1, 1913, value was correct, but the question for the Board to determine is the fair market price or value of the property on March 1, 1913.  Until the petitioner has established by competent evidence that the value on that date was different from that determined by the Commissioner, the Commissioner's determination must stand.  Judgment will be entered for the respondent.