*3693 1. Petitioner owned 92,500 shares of stock of the Copper Mountain Mining & Smelter Co., which stock on March 1, 1913, had a fair market value of 11 cents per share. In 1919 the board of directors resolved to abandon the corporate property and dissolve the company. The petitioner first learned of the corporate action in the year 1920, and in his return for that year deducted as a loss the amount of $10,175, being the March 1, 1913, fair market value of the stock. The Commissioner disallowed the deduction. It is held that the evidence fails to establish a deductible loss.
2. The petitioner alleges that prior to March 1, 1913, he acquired 17,000 shares of stock of the Rocher De Boule Mining Co. at a cost of 50 cents per share and that on March 1, 1913, the fair market value of the stock was 43 1/2 cents per share. He further alleges that in the year 1920 he sold the 17,000 shares of stock for 5 cents per share, thereby sustaining a deductible loss of $6,545. It is held that the evidence fails to establish the time of acquisition, the cost, or the sale of the stock. The Commissioner's action in disallowing the deduction of the alleged loss is approved.
*887 These proceedings, duly consolidated, are for the redetermination of deficiencies in income tax for the calendar years 1919 and 1920 in the amounts of $3,303.62 and $4,798.64, respectively. The issues presented are (1) whether upon the dissolution in 1919 of the Copper Mountain Mining & Smelter Co. the petitioner sustained a loss by reason of the fact that he owned 92,500 shares of its stock and, if so, the year in which the loss was sustained, and (2) whether a loss was sustained in 1920 by reason of an alleged sale of stock of the Rocher De Boule Mining Co.
FINDINGS OF FACT.
The petitioner is an individual who resides in Butte, Mont.
Some time prior to March 1, 1913, the Copper Mountain Mining & Smelter Co. was organized and on March 1, 1913, its stock had a fair market value of 11 cents per share. On June 5, 1919, and at which time the petitioner owned 92,500 shares of its stock, the board of directors of the Copper Mountain Mining & Smelter Co. resolved to abandon its property and dissolve the corporation, the reason for such action being that the*3695 property could not be profitably mined. The petitioner was at that time living in New York City and did not learn of the corporate action until some time in 1920. In his return for the year 1920 petitioner claimed as a loss the amount of $10,175, being the March 1, 1913, fair market value of the stock. The Commissioner disallowed the deduction.
In his return for 1920 petitioner also claimed as a loss the amount of $6,545 on account of an alleged sale of 17,000 shares of stock of the Rocher De Boule Mining Co. The Commissioner disallowed the loss.
OPINION.
LOVE: The petitioner's first contention is that he sustained a loss by reason of the dissolution of the Copper Mountain Mining & Smelter Co. which is deductible in the year 1919 if not in the year 1920. In this respect he fails to sustain the burden of proof.
*888 The record is not clear as to whether the corporation was, in fact, dissolved, and there is no evidence as to whether, assuming the corporation was dissolved, the petitioner received anything in liquidation of his stock.
The petitioner adduced no evidence with respect to the cost of the 92,500 shares of stock to him. Assuming, therefore, that*3696 the corporation was dissolved and that the petitioner received nothing in liquidation of his stock, it is apparent that he has failed to establish that a loss was in fact sustained for the reason that the March 1, 1913, value of the stock is simply a limitation upon the amount of gain or loss that might otherwise accrue. We approve, therefore, the Commissioner's action in disallowing any deduction on account of the alleged loss in respect of the stock of the Copper Mountain Mining & Smelter Co.
The petitioner's second contention is that he acquired 17,000 shares of stock of the Rocher De Boule Mining Co. for 50 cents per share, which stock on March 1, 1913, had a fair market value of 43 1/2 cents per share, and that in 1920 he sold the stock for 5 cents per share to Oppenheimer, a business associate. The Commissioner denies these facts.
The petitioner was not present at the hearing held in this proceeding. Cohen, a business associate, testified that petitioner had told him that he purchased the stock in question at the price named. He further testified that Oppenheimer wrote to him that he had purchased the stock for 5 cents per share. This testimony is purely hearsay and*3697 clearly incompetent to prove the necessary facts.
We are of the opinion that the evidence fails to establish the alleged loss with respect to the stock of the Rocher De Boule Mining Co., and, consequently, we approve the Commissioner's action in regard thereto.
Judgment will be entered for the respondent.