*3221 1. The affirmative allegation of the Commissioner that the petitioner realized gain in 1920 on the sale of certain stock acquired in 1911, is not sustained by the evidence.
2. Claim for loss on sale of cotton, conceded by respondent, allowed.
3. Claims for losses on forfeited leaseholds held not sustained by the evidence.
*550 This is a proceeding for the redetermination of a deficiency in income taxes for the year 1920, in the amount of $1,408.45.
The petitioner alleges that the Commissioner erred in disallowing a deduction of $15,287, claimed to represent losses sustained by him in certain transactions hereinafter referred to in detail.
FINDINGS OF FACT.
In the year 1920, petitioner forfeited various leasehold interests which he theretofore acquired by his failure to pay the annual *551 rental thereon. These leasehold interests and their cost were as follows:
| Comanche County leasehold, 1/3 interest in 50-acre tract | $167 |
| Jack County leasehold | 480 |
| Brown County leasehold, 160-acre tract | 960 |
| Parker County leasehold, 1/2 interest in 160-acre tract | 300 |
| Total | 1,907 |
*3222 Petitioner claims the aggregate cost of these leaseholds as one item of his loss. The dates on which these leaseholds were acquired do not appear in the record.
In 1911 petitioner and his brother, H. E. Robertson, bought the assets of a business which had been conducted by their father, and transferred them to a corporation, which they had formed, for its capital stock. Petitioner's investment was between $10,000 and $11,000, and was represented by 51 per cent of the total capital stock. In 1920 petitioner sold his stock in the corporation to his brother for approximately $20,000. Among the assets of the corporation at the time of sale were 274 bales of cotton, which had cost $51,657.72 and against which advances to a considerable extent had been made by a third party. As a part of the transaction it was agreed that petitioner should retain a 51 per cent interest in the cotton account. Subsequently, in 1920, the account was liquidated, 226 bales being sold for $23,796.57, and 48 bales, which had been partially damaged by fire, for $7,009.21. The advances which had been made against the cotton exceeded the amount realized from its sale, and petitioner, in the form of cash*3223 and secured notes, repaid the third party who had made the advances the sum of $13,980.48. These repayments he now claims represent his loss in the cotton transaction.
In his income-tax return for the year 1920, petitioner did not in any way refer to the sale of his stock in the corporation to his brother.
At the hearing of this appeal counsel for respondent moved to amend his answer so as to include in petitioner's taxable income for the year 1920 the difference between the cost of petitioner's stock in 1911 and the amount realized therefor on its sale in 1920, namely, $10,000. The record contains no evidence of the March 1, 1913, value of the stock. At the same time he also conceded that the petitioner had proved the loss on cotton as claimed, to the extent of the difference between its cost and selling price, namely, $10,634.49.
OPINION.
LOVE: The item of gain or loss involved in the sale of petitioner's stock in the corporation in 1920 formed no part of the controversy in this case until that transaction was incidentally developed at the *552 hearing. It then developed that in 1911 petitioner had paid about $10,000 for 51 per cent of assets which were transferred*3224 to a corporation, for stock in the corporation. In 1920, he sold that stock for $20,000. Counsel for Commissioner then moved for increase of deficiency. By doing so he assumed the burden of proof. That stock was purchased prior to March 1, 1913, and in the event its selling price was no greater than its March 1, 1913, value, there was no gain. There was no evidence offered as to its March 1, 1913, value, hence we can not determine whether or not any gain was realized on its sale in 1920. The motion of the Commissioner for an increase of the deficiency is denied.
Counsel for the Commissioner at the hearing conceded the proof of loss sustained by petitioner on the sale of cotton in the amount of $10,634.49, and hence we hold that he is entitled to a deduction of that amount as a loss. There was no proof of the date of acquisition of the leases on which petitioner claimed a loss, whether prior to or subsequent to March 1, 1913. If acquired prior to March 1, 1913, and their market value was less on that date than cost, the loss, if any, was that value, since nothing was received for them. The burden of proof on this issue being on petitioner, we hold that he failed to make*3225 out his case on that issue and sustain the action of the Commissioner.
Reviewed by the Board.
Judgment will be entered under Rule 50.