Court Opinion

ID: 4602516
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:29:52.426734+00
Date Added: 2024-06-11T07:52:41.413315
License: Public Domain

C. G. OELTJEN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Oeltjen v. CommissionerDocket No. 11643.United States Board of Tax Appeals11 B.T.A. 608; 1928 BTA LEXIS 3765; April 16, 1928, Promulgated *3765  Fair market price or value of a certain farm at March 1, 1913, determined.  Rodney Dunlap, Esq., for the petitioner.  Philip M. Clark, Esq., for the respondent.  LANSDON *608  The respondent has asserted a deficiency in income tax for the year 1920 in the amount of $1,328.52.  The value of a certain farm at March 1, 1913, is the only issue in controversy.  FINDINGS OF FACT.  The petitioner is an individual who resides in Dodge County, Nebr., where he has been engaged in farming.  Some time in 1907 he acquired an improved farm of 160 acres at a cost of $69 per acre.  In the year 1920 he sold such farm for $231.25 per acre.  The farm in question is located about four miles from Scribner, a town of 1,000 population with good markets and shipping facilities for farm crops and live stock.  The surface is smooth and well adapted to cultivation and all the land, except a creek valley of about 15 acres which is used for pasture, is arable.  The soil is a black loam described in the official soil survey of Dodge County as Marshall Silt *609  Loam.  The top soil or true loam is about 15 inches thick and this is underlaid by about 12 inches of*3766  brownish loam below which there is a clay subsoil.  Marshall silt loam is well adapted to the production of corn and other cereals as well as for the culture of alfalfa, clover and other leguminous crops.  At the date of its acquisition by the petitioner the farm in question had been operated by renters for about 10 years.  The improvements, consisting of a dwelling, some small outbuildings, and fences, were in poor condition and the soil was badly infested with cockleburrs and other noxious weeds detrimental to the production of crops.  After the purchase of the farm and prior to March 1, 1913, the petitioner reroofed and remodeled the dwelling at a cost not disclosed by the record.  In the same period he constructed a large farm barn at a cost in excess of $2,000, built a new chicken house and a large cattle shed, remodeled and reroofed a combination granary and corn crib and rebuilt and added to the fences, all at substantial costs, the amounts of which except as to the barn were not proved at the hearing.  Petitioner operated the farm from 1907 to March 1, 1913, for the production of grain and live stock.  During such years he kept an average of 40 cattle, many hogs, and*3767  the horses necessary for operation.  The feeding of these animals resulted in the accumulation of large quantities of manure, all of which was spread on the arable land for the purpose of increasing fertility.  At March 1, 1913, all noxious weeds had been extirpated, the fertility of the soil had been greatly enriched, the improvements were in first class condition and the farm was in a high state of cultivation and productivity.  The farm in question was located in a settlement of Oldenburgers who came from Germany about 1878.  The Oldenburgers are very industrious, thrifty and intelligent.  Their farms are in the highest state of cultivation and are show places in Dodge County.  For many years prior to 1913 the prices of farm lands were higher in or near the Oldenburg settlement than in other sections of Dodge County.  In the years 1911, 1912 and 1913 several tracts of unimproved farm land adjacent to or near the tract in question and with similar surface and soil sold at prices ranging from $125 to $140 per acre.  The fair market price or value at March 1, 1913, of the farm, including improvements, involved in this proceeding was $175 per acre, or a total of $28,000.  In his*3768  income-tax return for the year 1920 the petitioner included in his gross income the amount of $9,000 as profit arising from the sale of his farm, computed on a basic value of $175 per acre at March 1, 1913.  Upon audit of such return the Commissioner determined that the fair market price or value of the farm at March 1, 1913, was *610  $125 per acre, increased the gross income of the petitioner by adding to the profit realized from the sale of the farm the amount of $8,000, and asserted the deficiency now in controversy.  OPINION.  LANSDON: The evidence shows that between 1907 and March 1, 1913, the petitioner made very substantial improvements on his farm, that it was in high state of cultivation and productivity at the basic date and that in 1911, 1912 and 1913 adjacent tracts of unimproved land were sold at prices ranging from $125 to $140 per acre.  In addition to the facts proved to show increase in value from date of purchase to March 1, 1913, the petitioner relies on the opinion evidence of five witnesses - a banker, two real estate operators and two farmers - all of whom had lived in the neighborhood for many years and were familiar with the farm lands and farm land*3769  values in Dodge County.  Al but one of these witnesses were of the opinion that the farm in question had a value of $175 per acre or more at March 1, 1913, and the fifth witness was of the opinion that such value was from $170 to $180 per acre at that date.  The respondent adduced no evidence in support of his determination.  Judgment will be entered on 10 days' notice, under Rule 50.