*222 Respondent determined a deficiency in income and profits tax for 1921 of $3,778,37, of which petitioner contests $1,039.03, and a deficiency in income tax for 1922 of $16,180.09, of which petitioner contests $5,366.11. Two of the pleaded issues were settled by the parties, leaving for determination only the question whether the Commissioner correctly determined the gain in 1922 derived from the sale of a building.
*223 FINDINGS OF FACT.
The petitioner is a corporation which in 1917 began the construction of a building in Philadelphia, which it sold early in 1922. Frederick Webber owned substantially all the stock, and he was the architect of the building. He died in 1921. Up to the time of his death and until the building was sold, there had been no agreement by the corporation to pay him for architectural services and no bill therefor had been received from him.
After the building was sold and after Webber died, the petitioner paid to his widow a sum of $62,079.10, *2893 of which $25,000 is said to represent compensation for such services.
OPINION.
STERNHAGEN: The corporation seeks to include the $25,000 in the cost of the building to be used as the basis for determining gain on its sale. It is only necessary to say that the evidence does not establish that such sum was in fact paid or incurred as an obligation of the petitioner. Petitioner sought to show that such an agreement would have been reasonable. Perhaps so, but as the sole stockholder Webber might as reasonably have omitted it, and, so far as the evidence shows, he did omit it. A voluntary payment to the widow after the sale does not establish cost, even though ratified in 1923.
While this disposes of the issue, it may be added that from the evidence it is not clear but that Webber may have been compensated before his death out of an amount of $100,000 borrowed by petitioner on second mortgage and turned over to him. A substantial part of this amount, large enough to include the $25,000 in question, remained unaccounted for.
The respondent is sustained.
Judgment will be entered under Rule 50.