*114 Decision will be entered for the respondent.
Involuntary Conversion of Property -- Gain Recognized in Full. -- Upon the facts, held, that there is no basis in fact for petitioner's theory that property disposed of in 1946 under threat of condemnation proceedings was sold in two parcels; that the petitioner is not entitled to apportion the proceeds received in a lump sum upon the sale of one parcel of land between two alleged component portions thereof; that since only a small part of the proceeds of the sale was used to purchase similar property, and the proceeds of sale not expended in acquiring similar property exceeded the gain realized, the entire amount of the long-term capital gain must be recognized under section 112 (f), Internal Revenue Code, for taxation.
*649 The Commissioner determined a deficiency of $ 4,762.56 in the petitioner's income tax for the year 1946. The deficiency results from the determination by the Commissioner that the entire amount of a long-term capital gain of $ 51,806.84, realized by the petitioner on the involuntary*115 conversion in 1946 of 50.2 acres of farm land, with improvements including the petitioner's residence must be recognized under section 112 (f) of the Internal Revenue Code in computing petitioner's income tax for 1946.
The only question for decision is whether all, or only a part, of the long-term capital gain realized by the petitioner on the involuntary conversion in 1946 of his farm on which he had his residence is to be recognized in computing petitioner's income tax for 1946.
FINDINGS OF FACT.
The stipulated facts are found as facts.
The petitioner is a resident of Norman, Oklahoma. He was a resident of Krenshaw, California, in 1947, and filed his return for the taxable year 1946 with the collector for the sixth district of California.
The petitioner is now over 83 years old. In January 1917, he purchased a tract of unimproved land, containing approximately 52 acres, adjoining the city limits of Norman, Oklahoma. The petitioner paid $ 13,416.66 for the land which was one continuous tract forming a rectangle. The land was purchased by the petitioner as one tract or parcel. The University of Oklahoma is located at Norman. The land in question is adjacent to the property of*116 the University of Oklahoma.
*650 After acquiring the property, the petitioner farmed the land until 1943. He erected improvements including a residence, barns, a hen house, and a corn and hay shed. All of the improvements were erected on what is referred to herein as "the north end" of the property which is an area of about 8 acres. The north end of the property also contained fenced pasture lands, a fruit orchard, and a vegetable garden. The fruit orchard and the vegetable garden, each, covered about an acre of land.
In 1943, the petitioner was no longer able to actively supervise or engage in farm work because of poor health. As a result, in each of the years 1943 to 1945, inclusive, the petitioner leased what is referred to herein as "the south 42 acres" of his farm to O. S. Boyd, a farmer, for farming purposes. The leases were oral crop rent arrangements, each for a term of 1 year. Under the arrangement, the petitioner received one-third of all crops raised on the land by the lessee. During the period 1942 to 1945, inclusive, the petitioner also sold all his livestock and farm animals. The petitioner retained the north end of the land, i. e., the 8 acres containing*117 all the improvements, and continued to live in the house until the property was sold in 1946. He did not actively engage in farming after 1943.
Several years prior to 1946, the petitioner sold two lots of approximately three-quarters of an acre, each, one out of the northeast and one out of the northwest corners of the tract. In 1946 the petitioner's tract of land contained approximately 50.2 acres.
In 1946, under imminent threat of condemnation proceedings, the petitioner sold the land to the University of Oklahoma for $ 75,000. The university was interested in acquiring the land only. The "Acceptance of Bid," or contract, signed by the petitioner on March 15, 1946, reads, in pertinent part, as follows:
TO BOARD OF REGENTS OF THE UNIVERSITY OF OKLAHOMA:
I hereby accept your offer of Seventy-five Thousand ($ 75,000.00) Dollars for the following described real estate owned by me, and described as follows, to wit:
A part of Lots One (1) and Two (2) and the South Half of the Northeast Quarter of Section Six (6), Township Eight (8) North, Range Two (2) West of the I. M., Cleveland County, Oklahoma, described as follows, to-wit: Beginning at a point 1080 feet West of the Northeast*118 corner of said Lot One (1) and running West 480 feet, thence South 174 feet, thence West 200 feet, thence South 2391.42 feet more or less to the South Line of said Quarter Section, thence East 880 feet, thence North 2391.42 feet, thence West 200 feet, thence North 174 feet to point of beginning, containing 50 acres, more or less, and subject to an oil and gas lease owned by Gulf Oil Corporation, reserving to myself title to existing buildings on said land, with the right to remove such existing buildings therefrom at any time within 90 days from date of consummation of sale to you; if such buildings are not removed within such time then I will make no claim of title thereto.
Within the period prescribed in the sales contract, the petitioner sold the improvements, separately, to other purchasers for a total of $ 1,550. *651 In 1946 the improvements on the petitioner's land had an adjusted basis of $ 11,009.
The contract between the petitioner and the Board of Regents of the University of Oklahoma did not contain any allocation, or apportionment of the purchase price between what are referred to herein as "the south 42 acres," and "the north end" of the tract, containing 8 acres. *119 The consideration of $ 75,000 recited in the deed conveying the property to the State of Oklahoma for the use and benefit of the University of Oklahoma is not apportioned in any manner. In the contract and in the deed of conveyance, the petitioner agreed to and he did convey one continuous tract or parcel of land.
The petitioner, after the sale of his property to the University of Oklahoma, decided to live in California, and he went to California in June 1946. In September or October 1946, the petitioner purchased, as his residence, a 5-room house in Krenshaw, California, for $ 18,017.70. The petitioner purchased the house with a part of the proceeds from the sale of his property to the University of Oklahoma. The petitioner invested substantially all of the remaining proceeds from the sale in United States Government bonds.
The petitioner, in his income tax return for 1946, reported a long-term capital gain of $ 33,789.14 from the sale of the property to the University of Oklahoma under imminent threat of condemnation proceedings. The petitioner in computing the gain of $ 33,789.14 included as an expense of sale, the cost of the residence purchased by him in California, or *120 $ 18,017.70. The petitioner computed the gain in the following manner:
| Gross sales price of land and improvements | $ 76,550.00 | |
| Less: | ||
| Cost of land | $ 13,416.66 | |
| Adjusted basis of improvements | 11,009.00 | |
| Expenses of sale | 317.50 | |
| Cost of replacement | 18,017.70 | |
| 42,760.86 | ||
| Long-term capital gain | 33,789.14 |
The Commissioner, in his notice of deficiency, determined that the petitioner realized a gain of $ 51,806.84 "from involuntary conversion of residence with 50.2 acres of land" computed as follows:
| Proceeds of sale | $ 76,550.00 | |
| Adjusted basis: | ||
| Cost (land) | $ 13,416.66 | |
| Improvements | 11,009.00 | |
| Expense of sale | 317.50 | |
| 24,743.16 | ||
| Gain realized | 51,806.84 |
*652 The Commissioner determined, further, that the amount of the proceeds of sale "expended in acquiring other property similar or related in service or use" was $ 18,017.70; that the amount of the proceeds of sale "not expended in acquiring other property similar or related in service or use" was $ 58,532.30; and that the amount of the gain recognized under section 112 (f) of the Internal Revenue Code was $ 51,806.84.
The petitioner realized a taxable long-term capital gain of $ 51,806.84*121 from the sale in 1946 of 50.2 acres of farm land with improvements.
OPINION.
The only issue for decision is whether all or only a part of the long-term capital gain realized by the petitioner upon the involuntary conversion in 1946 of his farm, on which he had his residence, is to be recognized in computing petitioner's income tax for the year 1946. The issue arises under section 112 (f) of the Code as it existed prior to amendment by the Revenue Act of 1951. The applicable section of the Code is printed in the margin. 1
*122 The parties are in agreement that the amount of the gain realized on the sale was $ 51,806.84; that the sale was an involuntary conversion of property made under the threat of condemnation proceedings; and that $ 18,017.70 out of the proceeds of the sale was forthwith and in good faith expended by the petitioner in the acquisition of a residence in California.
The petitioner concedes that the amount of the long-term capital gain as reported in his income tax return, i. e., $ 33,789.14, is incorrect. He contends, however, that in computing the amount of the taxable gain on the sale, the proceeds of the sale and the cost basis of the property should be apportioned between "the north end," i. e., the 8 acres on which he had his residence, and "the south 42 acres" which were devoted exclusively to farming. The petitioner, in effect, seeks to treat the sale of his property as the sale of two distinct parcels, one residential property, and the other farm land. He seeks to apportion the *653 proceeds of the sale as follows: $ 23,350 to residential property, and $ 53,200 to farm land. The petitioner argues that he realized a gain of $ 38,663.30 on what he calls "farm land," and a*123 gain of $ 13,143.54 on what he terms "residential property." The petitioner concedes that the alleged, apportioned gain of $ 38,663.30 which he would allocate to "farm land" should be recognized in full. But he argues that under section 112 (f) of the Code, the alleged, apportioned gain of $ 13,143.54 which he would allocate to "residential property" should be recognized only to the extent of $ 5,332.30, which is the difference between the proceeds of sale which he would allocate to "residential property," $ 23,350, and the proceeds of sale expended in acquiring a residence in California, $ 18,017.70. It is not necessary for us to narrate the details of the petitioner's theory of apportionment because the theory is not supported by the evidence.
The respondent contends that the gain realized must be recognized in full since the amount of the proceeds of sale "not expended in acquiring other property similar or related in service or use," i. e., $ 58,532.30, exceeded the amount of gain realized on the sale, i. e., $ 51,806.84; and that the petitioner sold only one tract of land and not two distinct parcels for which he received a lump-sum payment of $ 75,000, so that there is no *124 basis in the record for an apportionment of the proceeds of sale. We agree with the respondent.
The petitioner cites no authority for his novel proposition and we have found none which would lend support to it. In support of his proposition that the proceeds of the sale should be apportioned so as to secure some benefit from the provisions of section 112 (f), the petitioner argues that from 1943 to 1945, inclusive, a part of the property was used by him for residential purposes while the remainder was leased for farming purposes. Petitioner's allocation of the sales proceeds is based upon opinion testimony that, at the time of the sale, the 8 acres comprising "the north end" of the tract had a value of $ 23,350. He subtracts that amount from $ 76,550 and allocates the balance, $ 53,200, to the "farm land." The petitioner's theory ignores the actual facts of the transaction. The petitioner owned a single tract of land which was used for farming purposes, on which he had erected his residence and the usual farm improvements. He negotiated to sell and in fact sold one tract of land. The transaction was a purchase by the State of Oklahoma of one tract of land for $ 75,000 in a lump*125 sum. Neither the agreement of sale nor the deed of conveyance contains any apportionment of the consideration between portions of the single tract of realty, and no reference to farm land as distinguished from residential property is made.
We have previously held that a lump sum purchase price is not to be rationalized after the event of sale as representing a combination of factors which might have been separately stated in the contract if *654 the parties had been fit to do so. Marshall C. Allaben, 35 B. T. A. 327, 328. See, also, Lapham v. United States, 178 F.2d 994">178 F. 2d 994. In the Allaben and Lapham cases, supra, each taxpayer, under the threat of condemnation proceedings, sold a part of a parcel of land which he owned to the State of Connecticut for an agreed upon price. The sales agreements did not apportion the proceeds between land value and consequential or severance damages. It was held in each case that the taxpayer could not, after the event of sale, apportion the proceeds for tax purposes between land value and damages. We are of the opinion that the rationale of the Allaben and Lapham*126 cases, supra, is applicable to this proceeding.
The respondent's determination is sustained.
Decision will be entered for the respondent.
Footnotes
1. SEC. 112. RECOGNITION OF GAIN OR LOSS.
(f) Involuntary Conversions. -- If property (as a result of its destruction in whole or in part, theft or seizure, or an exercise of the power of requisition or condemnation, or the threat of imminence thereof) is compulsorily or involuntarily converted into property similar or related in service or use to the property so converted, or into money which is forthwith in good faith, under regulations prescribed by the Commissioner with the approval of the Secretary, expended in the acquisition of other property similar or related in service or use to the property so converted, or in the acquisition of control of a corporation owning such other property, or in the establishment of a replacement fund, no gain shall be recognized, but loss shall be recognized. If any part of the money is not so expended, the gain, if any, shall be recognized to the extent of the money which is not so expended (regardless of whether such money is received in one or more taxable years and regardless of whether or not the money which is not so expended constitutes gain).↩