*3537 1. Carrying charges for a period prior to March 1, 1913, may not be added to cost of property acquired prior thereto in determining cost or other basis for computing gain or loss on sale of the property.
2. The depreciated March 1, 1913, value of property acquired prior thereto, determined, and, being in excess of cost, held, basis for determining gain on sale.
*346 This proceeding results from the determination by the Commissioner of deficiencies in income tax for the years 1920 and 1921, in the amounts of $266.49 and $367.97, respectively. The issue involved is the gain or loss resulting from the sale of real property in the year 1920. The Commissioner determined a gain and computed it upon the installment sales basis.
FINDINGS OF FACT.
Petitioner resides at 98 Montague Street, Brooklyn, N.Y. In 1905 he purchased lots comprising 66 2/3 front footage on Ocean Avenue, Brooklyn, N.Y., for the sum of $11,000, and Incident to such pruchase, paid legal expenses and commissions totaling $431.01. From 1905 to 1909, he paid taxes on the property in question, *3538 totaling $565.09, and interest on deferred payments due on the purchase price of $2,805. In december, 1909, he sold 16 2/3 feet of the property purchased in 1905 to G. M. Boardman, leaving a front footage of 50 feet. In 1910 he constructed a house on the lot at a cost of $8,600.
For the period 1910 to 1913, petitioner paid the following amounts by reason of his ownership of the property:
| Legal services, surveyors' fees and assessments | $555.82 |
| Taxes | 761.82 |
| Water charges or assessments | 51.00 |
| Insurance | 40.00 |
| Interest | 3,727.29 |
In his Federal income-tax returns, petitioner claimed and was allowed depreciation for the period 1913 to 1920 on the property, in the total sum of $1,507.50.
The fair market price or value of the property situated on Ocean Avenue, Brooklyn N.Y., on March 1, 1913, was $19,500.
*347 Petitioner sold the property in 1920 for $22,000, the sale being consummated upon the following terms: $4,000 cash at time of sale and the remainder of purchase price was secured by bond and mortgage, payable in installments of $2,000 in 1921, $1,000 in 1922, $2,000 in 1923, $1,000 in 1924, and the remainder of the purchase price due and payable*3539 in 1928. Fees for commissions due on the sale of the property, and legal services paid incident to the sale, amounted to $620, leaving a net sale price of the property of $21,380.
OPINION.
MILLIKEN: Petitioner seeks to add carrying charges, such as interest and taxes, paid prior to March 1, 1913, to the cost of the property, for the purposes of determining gain or loss on the sale. We have heretofore ruled on this question adversely to his contention. .
The deficiencies in question should be recomputed. The fair market price or value of the property on March 1, 1913, was $19,500 and depreciation on the building value of $1,507.50 should be subtracted from such value for purpose of determining gain resulting from the sale of the property for $21,380.
Judgment will be entered on 15 days' notice, under Rule 50.