*1940 The petitioner is not entitled to deduct from his gross income for 1924 an amount which he paid in that year for the purpose of aiding a proposed lessee to defray its expenses of moving into a building in which he owned a one-half interest.
*36 The Commissioner determined deficiencies of $1,925.35, $16.94, and $24.20 in the petitioner's income taxes for the calendar years 1924, 1925, and 1926, respectively. The petitioner alleges that the Commissioner erred in disallowing a deduction of $5,000 from his gross income for the year 1924.
FINDINGS OF FACT.
The petitioner is an individual residing in Decatur, Ill. During the years 1923 and 1924 and for many years prior thereto he had his brother owned certain premises located in the business district of that city. Each owned an undivided one-half interest.
In the year 1923 the Linn & Scruggs Dry Goods & Carpet Co., a corporation, had an option to lease the above mentioned property for a period of twenty years. The corporation decided not to exercise this option unless others consented to assist*1941 it in defraying the *37 cost of moving its goods from the site it was then occupying to the building in which the petitioner had a one-half interest. With respect thereto the following agreement was executed:
This agreement made this 31st day of December, A.D. 1923 by Charles F. Bachman and William G. Bachman, hereinafter called the lessors, and Linn & Scruggs Drygoods & Carpet Company, a corporation, hereinafter called the lessee.
Witnessed, that whereas concurrently with and in consideration of the execution hereof the lessee has exercised its option granted by the lessors and Ella M. Bachman, dated July 23, 1923, and has leased the premises situated in this city of Decatur, Macon County, Illinois, described as follows, * * *
And whereas lessee contemplates moving this Department Store to the building or such premises if part of its moving expenses are paid by others.
And whereas J. F. Mattes of Decatur, Illinois, has undertaken to raise $30,000 for lessee to be used in moving its said store, in consideration of the foregoing and the execution hereof of the lessors, the lessee covenants and agrees that if said J. F. Mattes shall well and truly pay the lessee*1942 on or before January 15, 1924, the sum of $30,000 in cash or bankable notes, payable on or before July 20, 1924, without interest until after maturity, it would move this department store into the building on the leased premises, and in consideration of the foregoing and of the execution hereof and of said lease by the lessee, the lessors do hereby covenant and agree that if the said J. F. Mattes fails to pay the $30,000 to the lessee on or before January 15, 1924 as aforesaid, the lessee may at its option at any time on or before January 20, 1924, cancel and terminate its lease of said premises and thereby relieve itself and the lessors of and from any and all liability to each other thereunder and of every nature and character.
* * *
The petitioner gave his note dated January 12, 1924, for $5,000, payable July 20, 1924, to the order of Linn & Scruggs Dry Goods & Carpet Co., which note had written on it the following words:
Provided Linn & Scruggs Dry Goods & Carpet Company move and occupy Bachman Bros. Building as their contract provides otherwise void.
This note was paid on July 29, 1924. All of the money raised by Mattes, including the $5,000 paid by the petitioner, *1943 was used in defraying the expenses of moving the dry goods company into the building owned by the petitioner and his brother. The dry goods company entered into a lease of the aforesaid premises for a period of twenty years beginning September 1, 1924. The petitioner kept his books on the basis of cash receipts and disbursements.
Counsel agreed that if the $5,000 in question is a proper deduction from the petitioner's gross income for the year 1924, his tax liability for that year will be settled under Rule 50, and the deficiencies asserted for the years 1925 and 1926 are correct. They further agreed that, in case the $5,000 is not a proper deduction from the petitioner's gross income for the year 1924, then it is proper to prorate it over the *38 life of the lease and there results a deficiency of $1,897.02 for the year 1924 and overpayments of $5.32 and $7.50 for the years 1925 and 1926 respectively.
OPINION.
MURDOCK: The petitioner seeks to deduct to $5,000 from his gross income for the year 1924. The respondent now takes the position that the deduction should be prorated over the term of the twenty-year lease. Counsel for the petitioner relies principally upon*1944 the case of , but that case has since been overruled. See . The petitioner has failed to show that he is entitled to any greater deduction than the respondent is willing to give him by prorating the $5,000 over the term of the lease. Cf. ; ; ; ;; ; .
Judgment will be entered for the respondent and the deficiencies will be found in accordance with the stipulation.