Powers v. Commissioner

*702OPINION.

Yan Fossan:

Petitioner asks redetermination of a deficiency in income tax for the calendar year 1924 amounting to $1,076.29. The sole issue is the fair market value of a mortgage given on certain property located in Miami, Fla., during the taxable year, which respondent determined to have a fair market value equal to 40 per cent of its face and which petitioner contends bad no fair market value at the time received.

The evidence shows that this property was sold in 1924 for a price of $53,000 of which $20,000 was paid in cash and the balance covered by a mortgage due one-half on July 21, 1926, and the remainder in 1927. It appears that the property was purchased for speculative purposes and was not offered for sale in 1924 or 1925. It is of record that the property increased in value in 1924 and 1925. Petitioner’s testimony is directed almost entirely to proving that in 1926, after the deflation of the Florida boom, it was impossible to sell the mortgage notes or refinance the mortgage for its face value or anything approximating the same.

The record is almost devoid of any evidence bearing on the year 1924 other than that market values at that time were increasing. The testimony fails to prove that during the taxable year the mortgage was not fully worth the value determined. Subsequent developments in 1926 and other years do not demonstrate that at the time the mortgage was received in 1924 its fair market value was less than 40 per cent of its face. Petitioner has failed to sustain the burden of proving respondent’s determination to be in error. Old Colony Trust Co., 12 B. T. A. 1334.

Judgment will he entered for the respondent.