American Bank & Trust Co. v. Commissioner , 14 B.T.A. 615 ( 1928 )

AMERICAN BANK & TRUST CO., EXECUTOR, ESTATE OF RICHARD A. HESTER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

American Bank & Trust Co. v. Commissioner

Docket No. 13580.

United States Board of Tax Appeals

14 B.T.A. 615; 1928 BTA LEXIS 2947;

December 7, 1928, Promulgated

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G. B. Walton, C.P.A., for the petitioner.

Brooks Fullerton, Esq., for the respondent.

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LITTLETON

This proceeding arises as the result of a determination by the Commissioner of a deficiency in income tax for 1921 of $5,703.49. The issue involved is whether the income realized from a certain sale of land is returnable on the installment basis. The facts were stipulated.

FINDINGS OF FACT.

The petitioner is the executor of the estate of Richard A. Hester, who died in 1924 and who, until his death, was a resident of Pickens, S.C.

On July 20, 1920, Richard A. Hester entered into an agreement in writing with T. R. O'Dell for the sale of 379 acres of land, with buildings, in Pickens County, South Carolina. This agreement is duly recorded in Pickens County, South Carolina. The total consideration for the land and buildings was to be $100,000. Under the terms of the agreement $10,000 was paid to Richard A. Hester on July 20, 1920, and $40,000 on January 1, 1921. The agreement provided for the payment of $10,000 on July 20, 1920, $40,000 on January 1, 1921, and the balance of $50,000 in five equal annual payments of $10,000 each, the said unpaid balance of $50,000 on January 1, 1921, to be secured by a mortgage on the premises, deed having been made by Richard A. Hester to T. R. O'Dell January 1, 1921, and recorded in Pickens County, South Carolina, in accordance with the sales agreement.

OPINION.

LITTLETON: The controversy as to whether the petitioner should be allowed to report the profit from a certain real estate transaction on the installment basis arises because of differences between the parties as to when the sale took place. The petitioner contends that the sale was made on July 20, 1920, when an agreement for sale was entered into and $10,000 paid on account of the purchase price, and that since the $10,000 payment is less than one-fourth of the purchase price, the profit may be reported on the installment basis. On the other hand, the respondent found that the sale took place on January 1, 1921, when the deed was made to the purchaser, and $40,000 was received on account of the purchase price, and since this payment was more than one-fourth of the purchase price, he refused to allow the petitioner the benefit of the installment sales provision. The agreement made on July 20, 1920, was not submitted in evidence, nor do we have other information than the meager facts set forth in our findings.

In this state of the record we are certainly in no position to determine the correctness of the petitioner's contention, and accordingly must sustain the action of the Commissioner on the basis of its prima facie correctness.

Judgment will be entered for the respondent.