1924 BTA LEXIS 255">*255 A taxpayer who owned stock on March 1, 1913, which had a fair market price on that date in excess of the amount for which it was sold in 1920 is entitled to deduct as a loss in 1920, under section 202(a)(1) of the Revenue Act of 1918, the difference between the market value of the stock on March 1, 1913, and the price for which it was sold in 1920.
1 B.T.A. 73">*74 Before GRAUPNER, LANSDON, LITTLETON, and SMITH.
Upon the evidence of record and from the oral testimony given, the Board makes the following
FINDINGS OF FACT.
During the year 1903 the taxpayer purchased certain shares of the capital stock of the Union Traction Co. and the Indiana Union Traction Co. at a total cost of $7,500. In May, 1912, the two companies consolidated, forming the Union Traction Co. of Indiana, and the taxpayer received in the new company 68 shares of second preferred and 128 shares of common stock for the stock held by him in the two companies prior to their consolidation. In December, 1920, the taxpayer sold the 68 shares of second1924 BTA LEXIS 255">*256 preferred and 128 shares of common stock $264for and deducted in his return for the calendar year 1920 a loss of $7,236, the difference between the purchase price in 1903 of $7,500 and the sale price in 1920 of $264. The loss of $7,236 claimed by the taxpayer in his return was disallowed by the Commissioner in the deficiency letter mailed to the taxpayer on July 22, 1924, from which deficiency letter the taxpayer has appealed.
The market quotations for the stock of the Union Traction C. of Indiana on the Indianapolis Stock Exchange on March 1, 1913, were as follows:
| Bid | Asked | |
| Common | 7 1/2 | |
| First preferred | 80 1/4 | 84 |
| Second preferred | 40 |
The market quotations for this stock on March 1, 1913, as shown by the Commercial and Financial Chronicle were:
| Bid | Asked | |
| Common | 4 1/2 | 7 1/2 |
| First preferred | 81 | 85 |
| Second preferred | 34 | 37 1/2 |
DECISION.
The taxpayer is entitled to deduct from his gross income in the calendar year 1920 as a loss the sum of $2,935 on the sale in that year of stock of the Union Traction Co. of Indiana, which stock had a fair market price on March 1, 1913, of $35.75 per share for the second preferred and1924 BTA LEXIS 255">*257 $6 per share for the common. That part of the deficiency determined by the Commissioner by reason of the disallowance of any loss on the sale of this stock is disallowed.
The Board will determine the deficiency, if any, to be assessed upon revised computation by the Bureau of Internal Revenue which 1 B.T.A. 73">*75 shall be submitted by the Commissioner after due notice to the taxpayer, or upon stipulation, or upon rehearing to be set upon motion of either party.