Grace v. Commissioner

Siefkin:

This is a proceeding for the redetermination of a deficiency in income tax for the year 1920 in the amount of $402.14. That portion of the deficiency which is in controversy arises from the determination of the respondent that the fair market value of certain farm property on March 1, 1913, was $206.25 per acre, or a total of $28,875, for 140 acres. This amount was less than cost, so the respondent used cost in determining the deficiency. The property was purchased by the petitioner for $220 an acre, or a total of $30,800, by a contract executed on December 26, or 27, 1912, and deeds and possession were delivered on March 1, 1913, part of the payment being made in January, 1913, and the remainder when possession was given. The petitioner contended that the fair market value on March 1, 1913, was $225.50 an acre and made his return upon that basis. Witnesses gave their opinions to that effect, based upon knowledge of the property and of sales of other property. Opinion evidence, however, must yield to better evidence and we consider that the purchase of this very property by the petitioner, within a little more than two months of the date at which we are asked to value it, must be taken as fixing the value. If there were facts making the transaction one other than at arm’s length, it was the petitioner’s duty to produce them. In their absence, we approve the determination of the respondent.

Judgment will be entered for the respondent.