Before GRAUPNER, TRAMMELL, and PHILLIPS.
This is an appeal from the determination of a deficiency in income and profits taxes in the amount of $1,297.82 for the calendar year 1921.
The Commissioner found the deficiency on the theory that that part of the price for which certain land was sold in 1921 which was in excess of the value at which the land was entered on the taxpayer's books at the time of acquisition in 1912 represented a taxable profit. The taxpayer contends that the amount entered on its books did not represent the full value of the land and that its value at March 1, 1913, was in excess of such amount.
From the pleadings and the oral evidence introduced at the hearing the Board makes the following.
FINDINGS OF FACT.
1. The taxpayer is a California corporation with its legal office at Oakland and its principal office at San Francisco.
2. J. F. Cross, the former owner of the 154 1/2 acres of land here involved, died on October 27, 1910. The heirs of Cross formed the taxpayer corporation and assigned their interest in the land thereto. In April, 1912, 1925 BTA LEXIS 2364">*2365 the taxpayer issued its capital stock to the heirs in exchange for their interests.
3. The land thus acquired was entered on the taxpayer's books at $40 per acre, in the total amount of $6,180. Depreciation on improvements was taken in subsequent years and at the time of the sale in 1921 the land was carried on the books at $4,780.
4. The land was sold on May 12, 1921, for approximately $90 per acre, or a total of $13,962.10.
5. The land here involved had a fair market value as of March 1, 1913, of $90 per acre.
DECISION.
The deficiency determined by the Commissioner is disallowed.
ARUNDELL not participating.