*2830 Commissioner's determination approved for lack of sufficient evidence to show error.
*594 The Commissioner determined deficiencies in income tax for 1920 and 1921, in the amounts of $1,970.50 and $161.38, respectively. Petitioner assigns as errors the Commissioner's action (1) in determining an income from business of $3,372.68 for 1920 and $2,796.42 for 1921; (2) in holding that a profit of $9,588 resulted from the sale of an interest in a certain lease in 1920; and (3) in disallowing expenses of $565 for 1920.
FINDINGS OF FACT.
Petitioner is a resident of Shreveport, La.
In his returns for 1920 and 1921 petitioner reported net losses from a general merchandising business at Belcher of $4,341.21 and $4,777.20, respectively. The accounts of the business were kept on loose leaves in binders. When the business was closed in 1921 petitioner removed the leaves from the binders in order to use the binders for another purpose, and they can not be found. The returns were prepared from the books by a bookkeeper of several years experience. The*2831 Commissioner determined "by use of the percentage basis" that petitioner realized income from this business, of $3,372.68 for 1920 and $2,796.42 for 1921.
In schedule "E" of the return for 1920, petitioner deducted interest of $340, fire insurance of $93, and commission of $225 paid to agent on sale of oil lease. Of the total deducted in this schedule the Commissioner disallowed $565, for lack of evidence.
On April 28, 1919, Charles G. Laskey, Luther B. Smith, and the petitioner, for a total consideration of $2,472 cash, each acquired from George Belchic an undivided one-fourth interest in and to two certain oil and mineral leases covering certain lands in Claiborne Parish, Louisiana. Of the total consideration the petitioner paid $824. In 1920 these individuals and George Belchic sold their interests in one of these leases to the Claiborne-La., Oil Co., Inc., for $30,000. The petitioner received $7,500 par value of capital stock of that company, as his portion of the consideration for the sale of the lease. During 1920 the petitioner sold a portion of this stock for $892.50. No dividends were ever paid by the Claiborne-La., Oil *595 Co., Inc., and the company has*2832 been liquidated without any return to its stockholders. The Commissioner determined that petitioner received one-third of the proceeds from the sale of the lease, or $10,000, in cash; that the cost to petitioner of his interest in the lease was $412; and that petitioner realized a profit from the sale of $9,588.
OPINION.
LITTLETON: All of the evidence in this case was taken on depositions. The petitioner testified that he did not realize any profits from his general merchandising business in 1920 and 1921. The person who prepared petitioner's returns for those years testified that he is "familiar with the preparation of income tax returns" and that the returns for 1920 and 1921 "properly reflect the books." That sums up all of the evidence as to the first issue. We realize, of course, that petitioner, in assuming the burden of proof, is forced, under the circumstance of lost books, to resort to secondary evidence; but we are not satisfied, however, that the petitioner has, with the evidence given us, exhausted his resources in that respect. Certainly evidence of the sort adduced is far from convincing that the Commissioner erred in his determination.
As to the second*2833 issue, the disallowance by the Commissioner of expenses of $565 claimed in the return for 1920, no evidence whatever was introduced to show error. The Commissioner's determination, therefore, will not be disturbed.
There appears to be error in the premises upon which the Commissioner determined that petitioner realized a profit of $9,588 from the sale of his one-fourth interest in a certain oil lease to the Claiborne-La., Oil Co., Inc., in 1920. The parties apparently agree that the cost to the petitioner of this interest was $412. However, the Commissioner's determination is premised upon a selling price of $10,000 cash, whereas the evidence is conclusive that what the petitioner received was $7,500 par value of capital stock of the Claiborne-La., Oil Co., Inc. We are not satisfied though that the profit to petitioner in this transaction was less than what the Commissioner determined it to be. The petitioner contends that the fair market value of the stock was not more than the cost to the petitioner of his leasehold interest, to wit, $412. However, he testified that at the particular time there was a boom in the oil field in which the land covered by the lease was situated, *2834 and that he sold a part of this stock in 1920 for $892.50. He testified that he could not remember what part of the stock received was involved in the latter transaction, but he was positive that he had a considerable amount of the stock left. In his return for 1920, the petitioner reported the sale of 750 shares of Claiborne-La., Oil Co. stock for $892.50, which was at the rate of *596 $1.19 per share. However, we do not know the total number of shares of this stock which petitioner received in the first place, or the par value per share, so that this sale is not helpful in determining the probable value of the stock petitioner received for his leasehold interest. It does though cast considerable doubt upon the petitioner's contention, since within the year of the exchange of the leasehold interest for stock petitioner sold a part of that stock at a price which is twice the cost to him of his leasehold interest. Evidence as to events which took place subsequent to the exchange, such as the liquidation of the Claiborne-La., Oil Co., without any return to the stockholders, sheds no light on the probable value of the stock received for the leasehold interest, for we have*2835 not the remotest idea as to when that event occurred.
Judgment will be entered for the respondent.