1932 BTA LEXIS 1403">*1403 The fair market value as of March 1, 1913, of that portion of the petitioner's real estate which was sold for cemetery purposes during the taxable years, determined from the evidence.
25 B.T.A. 1272">*1272 These are proceedings for the redetermination of deficiencies in income tax as follows:
| Docket No. | Year | Deficiency |
| 30925 | 1922 | $1,374.72 |
| 30925 | 1923 | 6,731.76 |
| 30925 | 1924 | 7,180.62 |
| 42811 | 1925 | 7,722.99 |
| 42811 | 1926 | 6,141.57 |
The question at issue involves the fair market value at March 1, 1913, of the petitioner's cemetery property, sold during the taxable years.
FINDINGS OF FACT.
The petitioner is a Colorado corporation, with its principal office at Denver. It was incorporated February 20, 1890, to operate the Fairmount Cemetery, located in or near said city.
In 1910 the petitioner acquired all the capital stock of the Riverside Cemetery, also situated in Denver, thereafter operating both the Fairmount Cemetery and the Riverside Cemetery.
In1932 BTA LEXIS 1403">*1404 operating the two cemeteries, the petitioner sells land for burial purposes only, maintains a crematory and greenhouses, provides for the perpetual care of graves and burial lots, and engages in such other activities as are incidental to the above stated operations.
In 1890 the petitioner acquired approximately 560 acres of land, known as Fairmount Cemetery. This land was acquired in exchange for the petitioner's total capital stock of the par value of $500,000, plus certain bond issues. Prior to March 1, 1913, petitioner's capital stock was increased to $600,000 par value, and practically all of the bonds issued, which were not recalled immediately after issuance, had been retired.
25 B.T.A. 1272">*1273 The petitioner utilized from two to four acres of its land in the sale of cemetery lots for burial purposes annually. At March 1, 1913, there were 13.55 blocks of improved land and 120 blocks of unimproved land in the Fairmount Cemetery that were suitable for cemetery purposes, the blocks containing an average of 150 lots each. The petitioner's tract of land also contained 200 acres not deemed suitable for cemetery purposes.
The maximum cost of improving the unimproved land in1932 BTA LEXIS 1403">*1405 the cemetery tract was 5 cents per square foot prior to December 31, 1926, and the minimum cost was from 1 1/2 cents to 2 cents per square foot. The cost of improvements included surveying, platting, excavating, laying water pipes, seeding, sodding and the building of roads.
The gross income of the petitioner from 1900 to 1912 was $992,468, or an annual average of $76,343.69. The net earnings for this period were $496,162, or an annual average of $38,166.30. For the five-year period preceding 1913, the petitioner's gross income was $465,853, or an annual average of $93,171. The net earnings for said period were $247,978, or an annual average of $49,595.60.
In 1911 the petitioner sold 15 acres of land in its cemetery to the Temple Immanuel for a Jewish cemetery at $1,000 per acre cash, or a total cash consideration of $15,000. This land was located in the older or improved section of the petitioner's cemetery and a portion of it was contiguous to where interments had been made. As a part of the consideration for the sale of said 15 acres, the petitioner obtained the exclusive right to furnish wooden and cement boxes for interments, dig and refill graves and furnish flowers1932 BTA LEXIS 1403">*1406 and greenhouse supplies. The Jewish cemetery was located in a low position and on that account was not as desirable land as other portions of the petitioner's cemetery.
Petitioner's stock was sold from time to time subsequent to March 1, 1913, at $85 to $100 per share, no stock being sold in excess of par.
The petitioner's land consists of three classifications in respect of improvements, namely (1) the developed or improved section where lots are sold and interments made, (2) semi-improved, adjacent to the improved section, and (3) unimproved land. On March 1, 1913, and at the date of hearing, the unimproved land was used for the purpose of raising corn, wheat and other farm products. The tract contained a lake covering approximately 25 acres of land, which was used for irrigation purposes, and an irrigation ditch or canal traversed the property. A mausoleum was built subsequent to March 1, 1913.
Land comparable to the unimproved portion of the petitioner's tract could have been purchased on March 1, 1913, for $200 to $300 25 B.T.A. 1272">*1274 per acre, and land comparable to the 200 acres of arid land owned by the petitioner which was not deemed suitable for cemetery purposes1932 BTA LEXIS 1403">*1407 could have been purchased on said date at $125 to $150 per acre.
The petition in its capital-stock-tax returns, under oath, valued its properties and stock (6,000 shares) for the years indicated, as follows:
| Year | Value of real estate | Value of stock |
| 1918 | $534,000.00 | |
| 1919 | $560,248.00 | 664,505.03 |
| 1920 | 846,740.07 | 835,584.77 |
| 1921 | 846,740.07 | 815,869.36 |
| 1922 | $690,121.92 | $831,525.01 |
| 1923 | 667,487.48 | 780,409.29 |
| 1924 | 781,606.67 | 766,444.00 |
The petitioner's sales of cemetery lots during the taxable years, classified as of March 1, 1913, were as follows:
| Year | Classification of lots. | Area sold | Sale price |
| Sq. ft. | |||
| 1922 | Improved | 66,930 | $72,046 |
| Semi-improved | 22,088 | 15,796 | |
| Total | 89,018 | 87,842 | |
| 1923 | Improved | 61,468 | 73,306 |
| Semi-improved | 21,249 | 16,860 | |
| Total | 82,717 | 90,166 | |
| 1924 | Improved | 40,452 | 46,375 |
| Semi-improved | 42,878 | 55,527.50 | |
| Total | 83,330 | 101,902.50 | |
| 1925 | Improved | 28,157 | 31,328 |
| Semi-improved | 56,015 | 60,052 | |
| Total | 84,172 | 1 91,380 | |
| 1926 | Improved | 28,110 | 27,675.50 |
| Semi-improved | 37,561 | 45,602 | |
| Total | 65,671 | 2 73,277.50 |
1932 BTA LEXIS 1403">*1408 The improved property of the petitioner which was sold during the taxable years as above set out had a fair market value at March 1, 1913, of 88 cents per square foot, and the semiimproved property so sold had a fair market value, as of the same date, of 40 cents per square foot.
It was the consistent practice of the petitioner to make sales only in the improved or semiimproved areas. No sales of unimproved land were made.
OPINION.
TRAMMELL: The sole error assigned by the petitioner is that, in computing the deficiencies, "the Commissioner erred in not including 25 B.T.A. 1272">*1275 in the cost of the land sold the correct fair market value as of March 1, 1913, of said land."
Evidence was offered by both parties respecting the March 1, 1913, value of the petitioner's cemetery property, and for that purpose, the petitioner classified its land as (1) improved and (2) unimproved, while the respondent classified the land as (1) improved, (2) semiimproved, or that portion which lay immediately contiguous to the improved area at March 1, 1913, and (3) the portion used for farming which was wholly unimproved for cemetery purposes.
Much of the testimony of the witnesses was directed1932 BTA LEXIS 1403">*1409 to the question of the value of the unimproved farm land, none of which was sold during the taxable years, and for that reason we have not attempted to fix the value of the latter class at March 1, 1913, nor have we given consideration to the testimony on that point, since it affords no basis for determining the value of the other classes of land sold in the taxable years.
The petitioner offered in evidence, without objection from the respondent, schedules showing the block numbers, area in square feet and sale price of all lands sold in the taxable years. From other evidence of record, we have determined the block numbers which were improved at March 1, 1913, and those which were contiguous or semiimproved. We have accordingly set out in our findings of fact the area in square feet of improved and semiimproved land sold in each taxable year, together with the sale price. It remains only to determine the fair market value of these two classes of land at the basic date.
The petitioner contends that its land fully improved for cemetery purposes had an average fair value on March 1, 1913, of 88 cents per square foot, and submitted evidence in support thereof. We have found that1932 BTA LEXIS 1403">*1410 the improved land had a fair market value at the basic date as contended for by the petitioner.
The semiimproved land offers more difficulty in determining its fair value at March 1, 1913, the evidence varying widely on this point. However, from a careful consideration of all the evidence of record we have reached the conclusion, and so found, that this class of the petitioner's land, sold in the taxable years, had a fair value at the basic date of 40 cents per square foot.
It is shown that during the taxable year 1925 the petitioner made sales of "special repurchases" in the amount of $5,425, and in the taxable year 1926 made sales of "special repurchases" in the amount of $2,503, no block numbers of the said repurchases being designated, and no evidence being offered to show the state of improvement on March 1, 1913, of the land so repurchased and resold. If these lands were originally sold and repurchased prior to March 1, 1913, the basis for computing gain or loss upon their resale in the taxable years 25 B.T.A. 1272">*1276 would be the March 1, 1913, value, but if they were repurchased subsequent to March 1, 1913, the basis would be cost. On this point we have no evidence, and1932 BTA LEXIS 1403">*1411 we will therefore not disturb the action of the respondent.
The deficiencies will be redetermined accordingly.
Judgment will be entered under Rule 50.