Piedmont-Mt. Airy Guano Co. v. Commissioner

*74OPINION.

ARTJndell:

Section 234 (a) (14) of the Revenue Act of 1921, which is applicable to transactions under prior revenue acts, reads as follows:

If property is compulsorily or involuntarily converted into cash or its equivalent as a result of (A) its destruction in whole or in part, (B) theft or seizure, or (0) an exercise of the power of requisition or condemnation, or the threat or imminence thereof; and if the taxpayer proceeds forthwith in good faith, under regulations prescribed by the Commissioner with the approval of the Secretary, to expend the proceeds of such conversion in the acquisition of -other property of a character similar or related in service or use to the property so converted, or in the acquisition of 80 per centum or more of the stock or shares of a corporation owning such other property, or in the establishment of a replacement fund, then there shall be allowed as a deduction such portion of the gain derived as the portion of the proceeds so expended bears to the entire proceeds. The provisions of this paragraph prescribing the conditions under which a deduction may be taken in respect of the proceeds or gains derived from the compulsory or involuntary conversion of property into cash or its equivalent, shall apply so far as may be practicable to the exemption or exclusion of such proceeds or gains from gross income under prior income, war-profits and excess-profits tax Acts.

The evidence is entirely insufficient to warrant the conclusion that petitioner sold its property because of the imminence of condemnation proceedings. There were located on Locust Point several fertilizing plants and the record would indicate that one of these plants is still operating there, though it is said that it is not so obnoxious as was petitioner’s plant. While complaints were made, there is no evidence of official action being taken or seriously contemplated by the authorities. Cf. The Davis Co. v. Commissioner, 6 B. T. A. 281.

This leaves for consideration solely the question of the value of the real estate on March 1, 1913. There was no dispute between the parties as to the value of the improvements. The only evidence as to the value of the land was that offered by petitioner which was in the form of opinion evidence by qualified real estate men. Their evidence leaves us in little doubt that the land was on March 1, 1913, of a value of at least $70,000 and this figure should be used in determining the profit, if any, on the sale of petitioner’s plant at Locust Point in 1920.

Any change in invested capital for the taxable year which may result from the decision in Piedmont-Mt. Airy Guano Co., 3 B. T. A. 1009, should be adjusted in the recomputation to be made under the decision in the present proceeding.

Judgment will he entered on 15 days’ notice, u/nder Rule 50.

Considered by Steiinhagen and Lansdon.