*2932 1. MOTION TO DISMISS denied.
2. MARCH 1, 1913, VALUE of certain land determined for purpose of computing profit derived upon the sale thereof.
*50 This proceeding arises from respondent's determination of a deficiency in the amount of $1,615.50 in petitioner's income tax for the calendar year 1920. In computing the profit derived from the sale of certain land by petitioner, respondent determined that the March 1, 1913, value was the same as the cost thereof in 1910, whereas pettioner contends that the March 1, 1913, value was greatly in excess of the cost.
At the time this proceeding was called for hearing at Washington, D.C., there was no appearance for petitioner and counsel for respondent moved to dismiss the proceeding for the reasons that the issue is one of fact; that although depositions have been taken and filed they are not in evidence until offered and received; and that the material facts alleged in the petition are denied by the answer. Prior to the date set for hearing, petitioner advised the Board in writing that he could not*2933 appear personally nor by counsel and he made a motion that the case be submitted upon the pleadings and the depositions taken and filed. Such procedure is provided for by Rule 29 of the Board's rules of practice and petitioner's motion for the submission of the case is granted. Respondent's motion to dismiss is denied.
FINDINGS OF FACT.
Petitioner, a resident of Yuma, Yuma County, Colo., purchased 130 acres of land in the NE. 1/4, sec. 27, T. 2 N., R. 48 W., 6th P.M., Colorado, for cash in the amount of $4,875, or at the rate of $37.50 per acre in June, 1910. The improvements thereon in March, 1913, consisted of a one-story frame dwelling 20 feet by 40 feet, a barn 16 feet by 24 feet, lean-to stables, well and wind-mill, fences, and the land was under cultivation. The land was adjacent to the corporate limits of the town of Yuma, had a frontage of about 1,400 feet or three and one-half city blocks along the main highway south, *51 and extended one-half mile south of the town. Directly across the street from petitioner's land in March, 1913, were town dwellings, and the main business street of Yuma when extended would cut through petitioner's land, which was ideally*2934 located for subdivision into building lots. The town of Yuma grew in population rapidly from 1908 to 1920.
The land directly north of petitioner's within the corporate limits, and known as Lougee's Addition, was subdivided into building lots which were sold at prices ranging from $55 per lot in 1908 to $125 per lot in 1913, or at the rate of about $330 per acre in 1908 up to about $750 per acre in 1913. Lougee's Addition extended only two blocks north and south, so that petitioner's land was only two blocks south of the business center of the town, which was growing toward the south. The SW. 1/4, sec. 27, T. 2 N., R. 48 W., 6th P.M., was purchased in 1910 at $31.25 per acre and sold in 1920 by J. G. Lane. In computing Lane's profit the March 1, 1913, value of his land was placed at $75 per acre, which value was accepted by the Commissioner of Internal Revenue.
The land in question had a fair market value of $75 per acre on March 1, 1913.
In May, 1920, petitioner sold the said 130 acres of land for $22,750 cash, or at a rate of $175 per acre, for the purpose of subdivision into building lots.
OPINION.
TRUSSELL: For the past twenty years petitioner has been engaged*2935 in the real estate business in Yuma and is thoroughly familiar with land values in and around that town since about 1900. The other witnesses who testified had knowledge of the growth of Yuma, and the value of the lands in question on March 1, 1913. The uncontradicted testimony of the witnesses establishes that petitioner's 130 acres of land were directly in the path of the growth of the town; that on March 1, 1913, there were dwellings directly across the street; that on said latter date the land had a value for purposes of subdivision over and above its value for farm lands; and that petitioner's land had a fair market value of at least $75 per acre on March 1, 1913.
No question has been raised as to the value of the improvements on the land nor as to the rate of depreciation used by respondent in his computation.
The deficiency should be recomputed upon the basis of the March 1, 1913, value as found hereinabove.
Judgment will be entered pursuant to Rule 50.