*703OPINION.
Phillips:These appeals present solely the question of the fair market value on March 1, 1913, of the stock of Henderson Cotton Mills. There was no market establishing sales prices on or about March 1, 1913, and taxpayers are forced to rely upon other evidence of its value on that date.
The taxpayers assert that the actual value of the assets of the corporation on March 1, 1913, was greatly in excess of the book values, and that, based upon such actual values, the stock was worth $194.59 per share on March 1, 1913. In support of such contention the taxpayers offered in evidence an appraisal of the plant of the company as of March 1, 1913. This appraisal is “ based on the total replacement cost on that date less accrued depreciation.” While such an appraisal may have many legitimate uses, it can be of little assistance in solving the question presented to us. Appeal of Stokes Milling Co., 2 B. T. A. 1284. The statute specifies that the fair market value of the stock shall be the test. The taxpayer contends that, in the absence of actual sales, the fair market value of the stock is equal to the fair market value of the assets of the company. Even though we were to accept this contention, the fair market value of the assets is entirely different from the replacement cost, less accrued depreciation. The statute does not ask what it would cost to replace the assets in their worn condition, but what price could be obtained for them in a fair market. The testimony indicates that on March 1, *704Í91S, the cotton manufacturing business was in a depressed condition which had continued for a period of several years. Under such conditions, it can not be assumed with any hope of accuracy that the replacement cost of a cotton mill represents its fair value on the market. There are other objections to the appraisal which it is unnecessary to discuss in this appeal.
The corporation had good earnings and dividend records. It appears that from the date of organization to March 1, 1913, the average annual earnings were approximately 12 per cent of the capital and surplus invested. The book value of the stock on March 1, 1913, was approximately $119 per share, excluding any value to be attributed to the good will or earning capacity of the corporation or any appreciation in value of its assets over cost less depreciation written off. Under such circumstances, it might well be contended that the stock had a value in excess of $150 per share on March 1, 1913, except for the fact that the years immediately preceding that date were the least successful in the entire history of the company. In 1908, 1910, and 1911, the corporation sustained losses. In 1909 there was a profit comparing favorably with the average profit of prior years. In 1912 there was a profit of over $100,000 from the operation of the business. The testimony, however, is to the effect that on March 1, 1913, the depression in the business still continued.
At the time of the sale in April, 1920, the stock had a book value, based on the balance sheet of December 31, 1919, and, disregarding the substantial profits subsequent to that date, of $212 per share. For the five years preceding, the corporation had earned profits exceeding 30 per cent upon its capital and surplus as shown by its books. At that time there was good demand for the products manufactured by the taxpayer.
Considering the conditions which existed in March, 1913, and which had existed for several years prior thereto, we reach the conclusion that the value of $150 assigned to the stock by the Commissioner should not be disturbed. Comparing the situations which existed in 1913 and in 1920, we fail to find any discrepancy between a value of $150 in 1913, when the stock had a book value of $119 and its earning capacity was impaired, and the sales price of $300 in 1920, when the stock had a book value of more than $212 and a record of exceptional earnings for the preceding years.