Sunburst Land & Inv. Co. v. Commissioner , 17 B.T.A. 577 ( 1929 )

SUNBURST LAND & INVESTMENT CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Sunburst Land & Inv. Co. v. Commissioner

Docket No. 22696.

United States Board of Tax Appeals

17 B.T.A. 577; 1929 BTA LEXIS 2287;

September 26, 1929, Promulgated

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">*2287 In the absence of proof of error by the Commissioner of March 1, 1913, value of land, his determination of such value is approved.

Wm. F. O'Haire, Esq., for the petitioner.

J. Arthur Adams, Esq., for the respondent.

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LOVE

">*577 This proceeding is for the redetermination of deficiencies in income and profit taxes for the years 1922 and 1923, in the amount of $863.34.

The only issue in the case is the March 1, 1913, value of certain town lots constituting at least the principal part of the town site of Sunburst, in the State of Montana.

">*578 FINDINGS OF FACT.

Petitioner is a Montana corporation with its principal office at Sunburst.

Sunburst, in 1913, was a village containing approximately fifty people. In 1911 certain individuals, whose names the record does not disclose, acquired for $1,200, 80 acres of land for the purpose of dividing it into town lots and selling the same. Those individuals expended additional amounts for perfecting title and improvements aggregating about $4,800, making a total cost of the property, approximately $6,000. In the latter part of 1912, those individuals caused the petitioner corporation to">*2288 be organized and incorporated, with an authorized capital stock of $12,000.

The town site properties above mentioned with all improvements, were transferred to the corporation in consideration of the issuance to the prior owners of the whole amounts of the capital stock. After designating and dedicating 12 acres for park purposes, the remaining 68 acres were cut into streets and lots, thereby making 476 lots, some of which were 25 by 140 feet and others 50 by 140 feet in dimension.

In 1912 and 1913 as many as 7 lots were sold, all, with one exception, being designated as business lots, and sold at $50, $100, $150, and $200, respectively. The expected demand for the lots did not materialize and from 1913 to 1921, only a few, if any, lots were sold.

In 1921 oil was discovered in that vicinity and this property came into demand and in 1922 and 1923 the sales which resulted in the alleged profit and consequent tax were made. The record does not disclose the number of lots so sold nor the price obtained.

The Commissioner determined the March 1, 1913, value of the property to be $12,000, the par value of the stock issued therefor, and dividing that value by 476, obtained an">*2289 average value per lot of $25.21 and thereby determined the deficiency.

OPINION.

LOVE: The only issue involved in this proceeding is the March 1, 1913, value of the properties involved. While it is true that just prior to March 1, 1913, some three or four of the town lots were sold for $50, $100, and $200, respectively, the evidence clearly discloses the fact that the expected demand for those lots did not materialize. There is nothing in the record to justify a conclusion that the property, as a whole, could have been sold in 1913 for $12,000. As acreage property, there is nothing in the record to indicate that the land was worth more in 1913 than in 1911, when it was purchased, plus perhaps the added expenditures.

">*579 From all the evidence submitted in the hearing we believe the Commissioner was at least fairly liberal in his valuation and that his determination should be and hereby is sustained.

The deficiency for 1922 is redetermined to be $554.51 and for 1923, $308.83.

Judgment will be entered for the respondent.