Allers v. Commissioner

*650OPINION.

Maeqtxette:

Two questions are presented in this proceeding. First, at what price did the petitioner sell his stock in the Good-heart’s Broadway Laundry Co. in 1923? Second, what was the March 1,1913, value of the capital stock of the Queen City Laundry Co. which the petitioner exchanged in 1918 for stock in the Good-heart Co.?

The petitioner alleges in his petition that he sold his Goodheart Laundry Co. stock in 1923 for $60,000. This is denied by the respondent and neither party has put before us any evidence whatsoever regarding the sale price of the stock. The respondent, from sources of information not placed in evidence in the proceeding, has determined that the actual sale price was $62,600. As nothing was offered to rebut that determination, we sustain it.

Regarding the second question, the petitioner contends that the Queen City Laundry Co. capital stock was worth $50,000. as of March 1, 1913. He arrives at that valuation from the following estimates: machinery, $30,000 to $35,000; good will, $12,000 to $13,000; supplies on hand, $2,500 to $3,000. His valuation of the machinery was his recollection of its cost, with no deduction for depreciation. The machinery was purchased at various times between 1908 and 1913. In our opinion this estimate of the value of the machinery is entirely too high. In the Queen City Co.’s tax return for 1914 the cqst of machinery was given .as $18,000, a deduction *651for depreciation was taken on that basis, and there is no evidence that any machinery or equipment was purchased after March 1,1913.

We are also of opinion that the petitioner’s estimated value of the good will is not justified. It appears that the business in question was started in 1890, became bankrupt in 1907, but resumed activity in 1908, and that its net profit in 1913 amounted to $797.96. We think that such a showing at the end of twenty-three years of business life, without further explanation, does not support a valuation of $12,000 or $13,000 for good will.

The respondent has determined the March 1, 1913, value of the capital stock of the Queen City Laundry Co. to be $18,625.45. There is nothing in the record to warrant a belief that that amount was an undervaluation.

The petitioner contends that the respondent has not used proper and correct data in arriving at his determination of deficiency; that the data used was furnished by the Goodheart Broadway Laundry Co. (which purchased the capital stock of the Queen City Co. in 1918), and that the proper and correct data was wilfully withheld or destroyed in order to injure the petitioner. There is nothing in the evidence before us to sustain these contentions.

Judgment will be entered for the respondent.