*1946 1. The phrasing of the notice of deficiency relating to the item in controversy, even if clear, is not the cause of action and does not frame the issues; and a petitioner may not, without an expressly pleaded admission or a stipulation, treat the notice as an official acquiescence by the Commissioner in all petitioner's propositions as to a particular item except those determined adversely to him.
2. A taxpayer seeking a deduction under section 214(a)(5), Revenue Act of 1921, must prove in fact that the transaction resulting in the alleged loss was and reasonably might have been entered into for profit.
3. When there is no intended profit and there naturally can be none, there is no just demand for a deduction of a loss.
4. The purchase by an executor of a legacy of a limited amount for a price equivalent to or greater than the worth of the legacy is held not to have been made for profit.
5. The fact that property turns out to be worth less than the price paid for it does not establish a realized loss.
6. On an issue before this Board of the value of property, for the purpose of computing an asserted loss, neither a formal settlement in the surrogate's court*1947 of an executor's uncontested account, nor the values accepted without contest by the Bureau of Internal Revenue in settling the Federal estate tax on the decedent's estate, is, as against the Commissioner, res adjudicata of the inventory or its valuation, nor do they alone establish a prima facie case of their correctness.
7. An executor's account and an estate-tax return stating an inventory and valuation of property at the time of decedent's death in insufficient to prove the value of the property two years later.
*13 The petitioner and his wife, Maud L. Carnrick, filed a joint incometax return for the year 1923, upon which the respondent determined a deficiency in income tax of $3,861.24. The petitioner attacks the respondent's disallowance of a deduction of $152,945.69 taken as a loss in respect of a legacy claimed to have been purchased at a cost greater than the amount realized.
FINDINGS OF FACT.
Petitioner is an individual residing at 465 Park Avenue, New York, N.Y., and his wife, Maud L. Carnrick, is a sister of Leo J. Lehman.
*1948 On May 31, 1921, Leo J. Lehman made and executed his last will and testament, which contained the following provisions:
II. I give and bequeath unto my wife, ZORA LEHMAN, the sum of Two hundred thousand ($200,000.) dollars. I direct my executors to pay this legacy in the following manner, believing the same to be for the best interests of my wife and of my estate: Ten thousand ($10,000.) dollars thereof as soon after the qualification of my executors as possible; four (4) payments of Ten thousand ($10,000.) dollars each, the first payment to be made one month after the qualification of my executors and the other payments to follow monthly thereafter. Six (6) months after the last said monthly payment shall have been made, my executors shall pay to my said wife, a further installment of Fifty thousand ($50,000.) dollars and every six (6) months thereafter a further installment of Fifty thousand ($50,000.) dollars until the entire legacy shall have been paid. I direct that all inheritance or transfer taxes that may be imposed upon the said legacy to my wife or assessed against her therefor shall be paid out of my residuary estate. In case of the death of my wife before me, *1949 this legacy shall lapse and become part of my residuary estate.
III. The above provision for my wife, ZORA, is made in lieu of all her dower rights. IV. All the rest, residue and remainder of my estate both real, personal and mixed and wherever situated, I give, bequeath and devise unto my sister MAUD L. CARNRICK, absolutely and for her own use. V. I have made no provision for my sister PAULA HELLER and my brother HUGO LEHMAN, because it is my wish and will that my wife ZORA and my sister MAUD L. CARNRICK, shall be the sole beneficiaries of my estate and also because my father has provided for them. VI. I appoint as Executrices of this my last Will and Testament, my wife, ZORA LEHMAN and my sister MAUD L. CARNRICK, directing that they need furnish no bond in any Court or proceeding for their duties as executrices. I give them full power of sale of any real esate of which I may die seized. I direct that in all matters connected with my estate, they shall make use of the advice and assistance of my friend, SYDNEY W. STERN.Leo J. Lehman died on July 7, 1921. The will of May 31, 1921, was admitted to probate in the Surrogate's Court of the County of New York, State*1950 of New York, on July 20, 1921, and on the same day letters testamentary were granted to Zora Lehman and Maud L. Carnrick.
*14 On August 23, 1921, the following agreement was made by Zora Lehman and Maud L. Carnrick:
AGREEMENT entered into this 23rd day of August, 1921, by and between ZORA LEHMAN, party of the first part, and MAUD L. CARNRICK, party of the second part, both of the City, County and State of New York.
WITNESSETH:
WHEREAS, under the terms of the Will of Leo J. Lehman, deceased (a copy of which is annexed hereto as Exhibit "A" and made a part of this agreement as if herein set forth) the party of the first part is entitled to a legacy of Two hundred thousand ($200,000) Dollars, and the party of the second part is the residuary legatee of the said decedent, and
WHEREAS, the said Last Will and Testament was duly probated in the office of the Surrogate of the County of New York on the 20th day of July, 1921, and
WHEREAS, it is the desire of the parties hereto that the party of the second part shall purchase the said legacy from the party of the first part for the consideration hereinafter set forth and obtain full and proper assignment thereof.
Now*1951 THEN, in consideration of the premises and the mutual promises and covenants hereinafter set forth, the parties hereto agree as follows:
The party of the first part in consideration of the payments hereinafter made and provided for by the party of the second part, does hereby assign, transfer and set over the said sum of Two hundred thousand ($200,000) Dollars, given and bequeathed to her by the Last Will and Testament of Leo J. Lehman, deceased, to said party of the second part, her legal representatives and assigns, together with all interest due and to become due and all her estate, right, title and claim in said legacy; and said party of the first part hereby constitutes and appoints said party of the second part, her true and lawful attorney irrevocable for and in her name, place and stead, but at the sole cost and expense of the said party of the second part, to demand, sue for, and recover the same and upon payment and receipt of the same or any part thereof to release and receipt for the same in such manner as shall be lawful and proper.
The party of the second part in consideration of the foregoing assignment to her by the party of the first part does hereby agree to*1952 pay to the party of the first part the sum of Two hundred thousand ($200,000) Dollars, payable as follows:
Simultaneously with the execution of this agreement, Fifty thousand ($500,000) Dollars, of which Twenty-five thousand ($25,000) Dollars shall be in cash or certified check, and the balance by the delivery of bonds at the market value thereof, acceptable to the party of the first part, to be sold at the option of the party of the first part on or before August 25th, 1921 otherwise to be deemed accepted and any deficiency to be made good by the party of the second part. The receipt of the said Fifty thousand ($50,000) Dollars is hereby acknowledged by the party of the first part.
The balance of One Hundred fifty thousand ($150,000) Dollars by delivering to the party of the first part, six certain promissory notes of the party of the second part, each dated the day of this agreement and payable the first thereof January 2nd, 1922, the second thereof July 1st, 1922, the third thereof January 2nd, 1923, the 4th thereof July 2nd, 1923, the fifth thereof January 2nd, 1924, the sixth thereof July 1st, 1924, each note to be endorsed by Mr. Joseph Lehman, the father of the party of*1953 the second part, and make payable to the order of the party of the first part, and shall further and as collateral security for the payment of the said notes pledge certain securities *15 to be mentioned in the said collateral notes and which securities shall be acceptable to the party of the first part, it being the understanding of the parties that the acceptance of the said notes and the securities given as collateral for each shall be deemed full acceptance by the party of the first part of the said payment of One hundred fifty thousand ($150,000) Dollars.
The party of the second part further in consideration of the assignment to her of the said legacy agrees to hold the party of first part harmless from the payment of any tax of any nature and kind that may be levied or assessed by the Government of the United States and by the State of New York by way of inheritance, transfer or other tax against the said legacy, and agrees to hold the party of the first part harmless from any claims that may be raised by any person or corporation against the party of the first part by reason of the said legacy.
The party of the second part represents and warrants that she is the*1954 sole owner of all the right, title and interest in the stocks, bonds, mortgages and security which she is pledging as collateral to the respective notes or giving in payment hereunder, or that she has the right and authority to sell or pledge the same. The party of the second part agrees that if at any time any claim is made to or asserted against any part of the said security, she will either take up the note affected thereby and pay the same or substitute in place of any such security thus claimed, a majority of the capital stock of the corporation J. & D. Lehman Inc., of No. 25 Union Square, New York City. If any such claim is asserted against any of the bonds delivered to the party of the first part in payment of the first payment under this agreement, then the said majority of stock of J. & D. Lehman Inc., shall be immediately delivered to the party of the first part as security against any liability on any such claim.
The party of the first part agrees to cause to be delivered to the party of the second part on demand all interest coupons on the bonds pledged as security as soon as they become payable, subject, however, to all conditions of the notes for which the said bonds*1955 are collateral security, or to pay the party of the second part in place and stead of the said coupons the surrender value thereof. But nothing herein contained shall in any way be deemed to affect the negotiability of the said notes.
The securities pledged with each note, are as follows, to-wit:
[The securities held as to each note are here separately listed, but need not be reproduced. It may be said, however, that none of the shares of J & D. Lehman Inc. are included.]
It is understood and agreed that after the payment of the note of $25,000, payable January 2nd, 1922, the securities pledged for the payment of the said note shall be transferred and applied as additional security to the note of $25,000, payable July 1st, 1922.
The party of the first part as part of the consideration of the purchase of the said legacy, does hereby release the estate of Leo J. Lehman, deceased, from all and any claim by her whatsoever.
The party of the first part agrees at once to resign as executrix of the estate of Leo J. Lehman, deceased, and waives all or any commissions that may be due her as such executrix and agrees to sign all proper and necessary instruments to effectuate*1956 her said resignation, but she does not waive any claim to the sum of $1,000, heretofore paid to her out of said estate.
This agreement is to bind the parties, their legal representatives and assigns.
*16 IN WITNESS WHEREOF, the parties hereto have signed and sealed this instrument the day and year first above written.
In the presence of:
ZORA LEHMAN. (LS)
MAUD L. CARNRICK. (LS)
SYDNEY W. STERN.
I have read the above agreement and with full knowledge of its contents I have endorsed the notes therein mentioned. I hereby declare that I have no claim to the securities listed therein and, in the event of the nonpayment of the said note or notes, I have no defense to my liability as endorser thereon.
JOSEPH LEHMAN.
SYDNEY W. STERN,
Witness.
The securities described in the agreement were deposited, together with the notes, with the Equitable Trust Co. of New York on August 23, 1921. About six or eight months later the parties modified the agreement. The balance then due on the notes amounted to $125,000 or $130,000, and Zora Lehman agreed to accept $12,500 less than the amount due, and by May, 1922, final payment of the notes was made, the total payments*1957 to Zora Lehman amounting to $187,500.
In June, 1923, Maud L. Carnrick filed in the surrogate's court her final account as executrix of the will of Leo J. Lehman. On June 30, 1923, after waiver of citation and consent of all interested parties, the account was judicially settled and the executrix was discharged and freed of and from all responsibility to any person interested as to all matters embraced in the account.
In the said account the money and other property received by and chargeable to the executrix are shown in Schedule A, as follows:
| Schedule A. | |
| Value | |
| $250 Third Liberty Bonds | $231.19 |
| 200 shares Ajax Rubber Company | 4,325.00 |
| 100 shares Atlantic Gulf & West Indies Steamship Line | 2,725.00 |
| 200 shares N.Y. Air Brake Company | 11,800.00 |
| 10 shares Mexican Petroleum Company | 1,000.00 |
| 408 shares Keystone Tire & Rubber Co. | 5,202.00 |
| 440 shares Texas Company common | 14,960.00 |
| 66 shares Texas Company, 50% paid Sub. Rects. | 825.00 |
| 2.253 shares J. & D. Lehman Co., Inc. | 266,507.37 |
| $750 War Saving Stamps | 600.00 |
| Cash in bank of Manhattan Company | 2,228.85 |
| Note of Alexander Wolf | 1,000.00 |
| Received Rolls Royce of America | 2,000.00 |
| Rebate Insurance Policy | 8.06 |
| Total | $313,412.47 |
*1958 *17 The account also contains itemized statements as follows:
| Value | |
| Schedule C. Moneys paid for administration, funeral and | |
| other necessary expenses, including State of New York Transfer Tax | $3,200,21 |
| Schedule E. Moneys paid to creditors of the deceased, | |
| together with names of creditors and the time of payment | 275,658.15 |
| Schedule F. Received by Maud L. Carnrick as assignee of | |
| Zora Lehman in cash and property | 34,544.11 |
| $313,412.47 |
Schedule G is a statement of the names of all persons entitled as husband, widow, legatee, devisee, next of kin or otherwise, to a share of the estate or fund, showing the value or approximate value of the interest of such persons, and is as follows:
| Schedule G. | |
| Zora Lehman, legatee: Value thereof | $34,544.11 |
| (Said Zora Lehman by instrument in writing dated the 23rd day of | |
| August, 1921, conveyed all her interest in the above legacy to | |
| Maud L. Carnrick.) | |
| Maud L. Carnrick, 225 West 86th St., New York City, | |
| residuary estate | Nothig. |
Among the items included as a debt of decedent in Schedule E is the following:
| Novem. 28. J. & D. Lehman Co. | $235,710.86 |
The charges*1959 to the executor and the credits claimed are stated in the account as follows:
| I charge myself as follows: | |
| With amount as shown by Schedule A | $313,412.47 |
I credit myself as follows:
* * *
| With amount of Schedule C | $3,200.21 | |
| With amount of Schedule E | 275,658.15 | |
| With amount of Schedule F | 34,554.11 | |
| 313,412.47 | ||
| Leaving a balance of | $,000000.00 |
Maud L. Carnrick filed a Federal estate-tax return for the estate in June, 1922. The gross estate reported and deductions claimed were as follows:
| Gross estate | |
| Stocks and bonds | $308,175.56 |
| Mortgages, notes, cash, and insurance | 3,228.85 |
| Other miscellaneous property | 2,008.06 |
| Transfers | 15,300.00 |
| 328,712.47 |
| Deductions | |
| Funeral expenses | $1,088.00 |
| Administration expenses: | |
| Executor's fee | 3,324.12 |
| Attorney's fee | 12,500.00 |
| Miscellaneous | 1,173.16 |
| Debts of decedent | 275,658.15 |
| Specific exemption | 50,000.00 |
| 343,743.43 | |
| Net estate for tax |
*18 The property included in the gross estate, with the*1960 exception of the item of $15,300, which was a gift of cash and property to take effect at death, is shown by the schedule attached to the return to be the same as that included in Schedule A of the executor's final account, supra, and each item of property is valued at the same figure in each schedule. A short time before his death, the decedent made a gift to Maud L. Carnrick of 2,000 shares of the stock of J. & D. Lehman Co., Inc. On the estate-tax return this transfer is reported as "not believed to be in contemplation of death or intended to take effect at or after death," and the value of the stock at decedent's death was stated to be $118.29 per share, or $236,580 for the 2,000 shares. It was not reported as included within decedent's gross estate.
The deduction for funeral and administration expenses included $3,324.12 executor's commission, and $12,500 attorney's fee, which are not reflected in the final account filed in the surrogate's court. It did not include the New York transfer tax, amounting to $939.05, which was deducted in Schedule C of said account. The debts of decedent are listed in detail and are identical with those listed in Schedule E of the final*1961 account. The indebtedness to J. & D. Lehman Co. of $235,710.86 is described as "indebtedness by deceased for money loaned. This is the amount of indebtedness on date of death of deceased."
In the audit of the return the Commissioner valued the stock of J. & D. Lehman Co. at $124.41 per share. He increased the value of the 2,253 shares included in the gross estate from $266,507.37 to $280,295.73, and, after determining that the transfer of 2,000 shares to Maud L. Carnrick was taxable, included the value thereof in the gross estate at $248,820. He also disallowed the deduction of executor's commission of $3,324.12, on the ground that no expenditure had been made therefor, reduced the deduction for attorney's fee from $12,000 to $8,000 upon a finding that the latter figure was the amount allowed by the court and paid, and made several other minor adjustments. The taxable net estate determined as a result of these changes was $255,486.52.
*19 The petitioner and his wife filed a joint return of income for the year 1923, in which a deduction was taken of $152,945.69, and the deduction was explained as follows:
Schedule G. 16.
LEO J. LEHMAN died in July 1921, leaving*1962 by Will probated in New York County July 1921, $200,000.00 to his widow Zora Lehman and the residue to his sister Maud L. Carnrick. By written agreement entered into in August 1921, modified in 1922, Zora Lehman sold and assigned said legacy to Maud L. Carnrick for $187,500.00. The final account of the estate, as per decree of Surrogate of New York County filed in August 1923 showed the value of said legacy as $34,554.11 a loss in 1923 of $152,945.89.
As a result of the audit of the petitioner's return, the respondent determined that no loss was sustained in 1923 as a result of the purchase of the Zora Lehman legacy. The respondent made no change in any item other than the loss on the purchase of the legacy, which was disallowed, thereby increasing the income by $152,945.89 and converting a net loss as returned of $107,530.72 into a net income of $45,415.17, resulting in a deficiency of $3,861.24.
OPINION.
STERNHAGEN: This proceeding has been feelingly presented on both sides, counsel for petitioner insisting upon a cold regard for the bare documentary evidence and the scant oral testimony of the attorney who drew the will and the agreement, and counsel for respondent presenting*1963 a circumstantial analysis of motives and conduct to establish a plan calculated to give substance to a factitious loss and thus artificially to reduce income tax. While we remain unstirred by these discussions of motive and justification, we are impressed by the unusual structure of legal facts upon which petitioner's claim rests and upon the subtlety of the argument devised to support it. The contentions of petitioner have been carefully prepared and have been no less carefully considered.
It is first urged that the only inquiry open for our consideration is, not whether petitioner has sustained a loss or whether the alleged loss is within the statutory description of deductible losses, but whether 1923 is the proper year of deduction, as claimed. Thus the issue is attempted to be confined to a hypothetical determination of the year of deductibility after assuming the loss to be actual and legally deductible.
The issue is not so narrow, even under the pleadings, to say nothing of the Board's statutory function to redetermine the deficiency. In the notice of deficiency of July 11, 1927, appended to the petition, the respondent set forth the petitioner's claim "that the loss*1964 *20 in question was sustained in a transaction entered into for profit," and referred to the loss "disallowed as indicated in office letter of March 5, 1927," (not pleaded or in evidence) and closed by saying "It is the opinion of this office, however, that inasmuch as your wife still holds the stock of the Lehman Glove Company that there is no loss in this transaction until it is disposed of. The original audit is, therefore, sustained." The "original audit" does not appear. This was the final notice which created petitioner's right to proceed in the Board under section 274(a), Revenue Act of 1926.
In his petition, the petitioner assigned five errors of respondent in his determination, (a) "impliedly holding that the net estate of Leo J. Lehman consisted chiefly of the stock of the J. & D. Lehman Co., Inc."; (b) "impliedly holding that the net assets taken over by Maud L. Carnrick was the J. & D. Lehman company stock"; (c) "not holding that the valuation of the net estate as determined by the court upon the judicial settlement was a complete valuation of the legacy payable"; (d) "not holding that upon settlement of the judicial accounting of the estate of Leo J. Lehman, *1965 a closed transaction occurred, resulting in a loss or gain to Maud L. Carnrick of the difference of the cost of the legacy and the net value of the legacy as determined by such judicial settlement"; and (e) "not allowing as a deduction the loss sustained in 1923 by Mrs. Carnrick as a result of the purchase of the specific legacy bequeathed to Mrs. Leo J. Lehman." The petition then alleged facts in paragraphs 5(a) to 5(s), inclusive, which were denied in the answer, except that respondent admitted that Maud Carnrick was petitioner's wife, that they filed a joint return, took a deduction thereon of $152,945.89 as described and that "as a result of the audit of petitioner's return the Commissioner determined that no loss was sustained in 1923 as a result of the purchase of the Zora Lehman legacy," and that he made no change in any other items. Among the facts alleged in the petition and denied in the answer were the terms of the will, its probate, the agreement and its terms, the payment, the performance, the modification, the nature and value of the gross estate, the judicial accounting and decree and their contents, and the insufficiency of the net estate to pay the specific legacy*1966 or "the sum paid for it by Maud L. Carnrick." It was denied that "the Commissioner held that no loss upon the purchase of the Zora Lehman legacy can be deducted or has been sustained until the J. & D. Lehman stock had been disposed of." It was denied that "the net assets of the estate remaining: namely, $34,545.11, were paid to said Maud L. Carnrick as assignee of Zora Lehman in cash and property."
*21 Upon these pleadings, without amendment, the proceeding came to trial. No facts were stipulated, and the findings indicate substantially stantially the evidence introduced. In our opinion, the issues are not restricted as petitioner argues. The phrasing of the notice of deficiency relating to the item in controversy, even if clear, is not the cause of action and does not frame the issues. The petitioner may not, without an expressly pleaded admission or a stipulation, treat the notice as an official acquiescence by the Commissioner in all petitioner's propositions as to this item except those expressly determined adversely to him. If the Commissioner finds one fact or reason which he believes supports his adverse determination, he is not required to express his views on*1967 any or all other matters relating to the item, and his failure to deal with them carries no implication as to their treatment. It is not the Commissioner's method of determination or computation which is the substance of the proceeding, for the deficiency may be correct despite a weakness in arriving at it or explaining it. ; . "It is immaterial whether the Commissioner proceeded upon the wrong theory in determining the deficiencies. In any event he burden was on petitioner to show that the assessment was wrong." .
Petitioner cites , and , to support his argument that only the year is in question. But those decisions consider different situations. In the Mathews case, the respondent sought in the Court of Appeals to change the issue from that tried and decided in the Board by suggesting a doubt as to facts which had been at least tacitly conceded at the trial. *1968 This the court did not entertain. In this case, the deficiency notice contains no admissions, the petition expressly alleges many facts denied by the answer, all relating to the one item, and it is not that the respondent is seeking to broaden the controversy, as in the Mathews case, but that petitioner is seeking to narrow it and escape the burden of his own pleading. In the Tailoring case, the court held that Rule 50 did not permit respondent to present to the Board after trial a new consolidated deficiency after petitioner had succeeded as to the only issue pleaded and tried, that of affiliation. This, too, is plainly different from the present attempt by petitioner to depart from his own pleading and the answer.
The questions, therefore, to be decided are whether the facts in the record establish that Maud Carnrick by the agreement of August 23 entered into a transaction for profit, and if so, that in such transaction she sustained a loss in 1923 deductible under section 214(a)(5), Revenue Act of 1921.
*22 There is nothing in the record to indicate that, even if there were a loss, there was any transaction entered into for profit. By the terms of the will*1969 Zora Lehman's legacy was limited to $200,000 payable over a period of 23 months without interest. Under no circumstances shown by the evidence could it be worth more than $200,000, and on August 23, 1921, a discount would have reduced the present value of the expectancy. So, whatever may have been Maud Carnrick's motive in the contract of August 23, 1921, it was not profit from the purchase of the legacy or the assignment of the rights under the legacy, even assuming, as perhaps we must, that as executrix she might properly enter with the legatee into such a transaction for the purpose of personal profit.
The statute has always confined deductible losses to certain carefully described classes, and the qualifications of these classes may not be ignored. The reasonable intendment of restricting non-business transactions resulting in losses to such as were entered into for profit is that, since the intended profit would be taxable, the loss suffered instead should be deductible. When there is no intended profit and naturally could be none, there is no just demand for a deduction of a loss. Personal losses, except by theft and other occurrences provided in section 214(a)(6), have*1970 never been broadly allowed by Congress to be deducted, and the provisions of section 214(a)(5) should not be construed so broadly as to override this general legislative purpose. In a case such as this, the taxpayer seeking the deduction must prove in fact that the transaction resulting in the alleged loss was and reasonably might have been entered into for profit. Cf. . We are of opinion from the evidence that the agreement of August 23, 1921, was not such a transaction.
But assuming, contrary to our opinion, that there was such a transaction as carried the possibility of deductible loss, there are several reasons for finding that no loss may be deducted in 1923. Maud Carnrick contracted for the assignment by Zora Lehman of her legacy and her resignation as executrix and the renunciation of commissions. These Maud Carnrick got, and the fact that they may have been worth less than she paid for them may not be a realized loss. An unfavorable purchase is not a realized loss. If we regard the contract as an acquisition not merely of the legacy, but of the right to the property coming by way of the legacy, it*1971 still is but a purchase of the Lehman Co. stock at a price, and carrying no present loss, even if we accept as proven that the legacy when distributable only yielded in fact $34,544.11.
But, if we assume, again contrary to our opinion, that the value of the legacy when received could be used to measure a loss, the proof *23 of such value is inadequate. It consists only of the executor's uncontested account and its settlement by the surrogate. There was no occasion for a controversy in the probate court and no adjudication upon evidence, but only a perfunctory approval where everyone was satisfied. This does not discharge the petitioner's burden in this proceeding of proving in fact the values upon which he relies. Irrespective of what may be the force and effect in proceedings before the Board of judgments of State courts upon matters of fact after a contest, cf. ; , there is no doubt that a formal settlement of an executor's uncontested account is not, as against the respondent here, res adjudicata of the inventory or its valuation nor does it alone establish a prima*1972 facie case of their correctness. This is also true of values accepted by the estate-tax division of the Bureau of Internal Revenue in settling the Federal estate tax on the decedent's estate where there was likewise no contested litigation.
Furthermore, the executor's account and estate-tax return purported to state an inventory and valuation at the time of death in 1921, and this does not prove the value of the property used in distribution in 1923, the year when petitioner claims his deduction.
We are, therefore, of opinion that the Commissioner's determination is correct, and it is not necessary to consider whether there has been a plan starting with he decedent's gift in contemplation of death of the Lehman Co. stock to bring about an artificial loss as the basis of the deduction claimed. And it is also unnecessary to intimate whether the $200,000 or any other amount can be taken to be the basis for any computation of loss in respect of this matter in future years.
Judgment will be entered for the respondent.