*234 Decision will be entered under Rule 50.
Capital Asset -- Real Property Used in the Trade or Business. -- A property acquired by a widow partly by devise from her husband and later partly by purchase which she had abandoned as a residence immediately after her husband's death and unsuccessfully attempted to rent over a long period was real property used in her business within the meaning of section 117 (a) (1), as amended by section 151 (a), Revenue Act of 1942, so that the loss therefrom was deductible for income tax purposes and was not a capital loss.
*678 The Commissioner determined a deficiency of $ 13,191.95 in income tax for 1947. The issues are whether the petitioner is entitled to a deduction representing a loss from the sale of property and whether the loss was a capital loss.
FINDINGS OF FACT.
The petitioner filed her individual income tax return for 1947 with the collector of internal revenue for the twenty-third district of Pennsylvania.
The petitioner is the widow of Edwin R. Crawford who died on September 13, 1936. The couple had occupied for many years as their residence a large property in Duquesne, Pennsylvania. A large three-story residence, a two-story garage and club house, a two-story tool house, and two servants' houses were on the property at the time of the death of the husband. The petitioner's husband owned a five-sevenths interest in the property at the time of his death and the other two-sevenths interest was owned by his unmarried brother, James S. Crawford, who made his home with the petitioner and her husband.
The petitioner received a five-sevenths interest*236 in the property under the will of her husband. The value of that interest at the time of his death and a year thereafter was $ 49,022.85. The petitioner, on January 26, 1943, purchased the remaining two-sevenths interest in the property for $ 9,000 from the devisee of James S. Crawford, who had died on December 24, 1941.
The petitioner also received another piece of property under the will of her husband. It adjoined the homestead property. This other property had a value at the time of his death and a year thereafter of $ 3,500.
The petitioner, shortly after the death of her husband, decided that she would no longer occupy the homestead property as her residence *679 but would acquire a new home in a different locality, the village of Ben Avon. She acquired the property in Ben Avon and began to remodel the house extensively in 1936. She continued to live in the Duquesne property until about September 1937, at which time she moved into a hotel in Pittsburgh and never afterwards lived in the Duquesne property. The petitioner moved into the Ben Avon house in February 1938 and has since lived there. James S. Crawford continued to live in the Duquesne property until his death*237 on December 24, 1941. The petitioner tried unsuccessfully to collect rent from his estate based upon his occupancy of her five-sevenths of the property.
The petitioner, before acquiring the remaining two-sevenths interest in the homestead property, consulted an attorney as to ways and means of realizing upon or disposing of her interest in the former homestead property. She decided to acquire the remaining two-sevenths interest so that she could better rent or dispose of the whole. She made no efforts to rent or sell the property until she had acquired the full ownership. Thereafter, at her directions, her attorney tried to rent or sell all of the property through real estate brokers in the vicinity of the property. No offers to rent were received. The residence was too large to rent or to sell in the city of Duquesne and the petitioner, in order to further a sale, demolished the residence and the garage and club house building in 1944 at a net cost to her of $ 3,890. The work was completed in March 1944.
The petitioner in 1944 made gifts of the two servants' houses and some additional land comprising a part of the homestead property to former employees.
The petitioner continued*238 her efforts to rent or sell the remaining property, and on September 9, 1947, she sold all of it for a net amount of $ 9,500.
The Commissioner, in determining the deficiency, disallowed an "alleged loss from the sale of property" of $ 52,412.85 "which you claimed as a deduction in your 1947 income tax return under the caption, 'miscellaneous.'"
The petitioner's basis for loss on the two properties which she sold in 1947, consisting of a part of the former homestead property and the other property adjacent thereto, was $ 55,700, and she sustained a loss of $ 46,200 in 1947 from the sale of those properties. The loss was sustained in a transaction entered into for profit. The properties were not capital assets.
OPINION.
This is not a case in which a taxpayer is attempting to convert a property to a business use after he owned and occupied it as a residence. Cf. Warren Leslie, Sr., 6 T.C. 488">6 T. C. 488. The petitioner, under the will of her husband, for the first time acquired *680 interests in the properties which she sold in 1947. She acquired those interests by devise from her husband. She then had a choice in regard to the homestead property -- she*239 could continue to occupy it as a residence or she could treat it as a business property in which she would be interested solely for what financial benefit she could get out of it. She decided upon the latter course. The fact that the petitioner lived in the residence for a short time after her husband's death while she was completing necessary arrangements for making her home elsewhere does not show an intent to make this newly acquired property her home. John N. Hughes, 8 B. T. A. 206; George W. Carnrick, 9 T. C. 756. Her ownership of that property and also her ownership of the adjoining vacant lots, thus began as a purely business transaction and was never complicated by her personal living problems. The situation was complicated by the fact that her brother-in-law owned a two-sevenths interest in the property and chose to continue to live there until his death in 1941. Thereafter, she made an unsuccessful attempt to claim rent from his estate. The evidence shows that the petitioner from the very beginning of her ownership treated the property not as her home but as a piece of property from which she hoped eventually*240 to derive some financial benefit. She made efforts to rent or sell all of the property just as soon as she acquired control over the remaining two-sevenths interest and her efforts eventually led to the sale in 1947. Her loss therefrom is a loss from a business transaction within the meaning of section 23 (e), Internal Revenue Code. Robert W. Williams, Exec., 1 B. T. A. 1101; Estelle G. Marx, 5 T. C. 173; N. Stuart Campbell, 5 T.C. 272">5 T. C. 272; Quincy A. Shaw McKean, 6 T. C. 757; George W. Carnrick, supra.
Her basis for gain or loss on the property is the value at the time of the husband's death of the five-sevenths interest in the homestead property and of the adjacent property, the cost of demolishing the buildings, and so much of the cost of the remaining two-sevenths interest as applies to the part sold, reduced by five-sevenths of the value at the date of the husband's death of the properties which she later gave to the servants. Some of those figures have been stipulated, others have been established by testimony and appropriate*241 findings have been made.
The petitioner claims further that her loss was an ordinary one and not a long term capital loss. She makes that claim upon the ground that the land sold was "real property used in the trade or business of the taxpayer" within the meaning of section 117 (a) (1). The Commissioner cites no authority on this issue and regards the two properties as forming one residential property from which there could be no deductible loss. It has been held that efforts to rent property, even unsuccessful or interrupted efforts, bring it within this or a similar exception to the definition of capital assets contained in *681 section 117 (a) (1). N. Stuart Campbell, supra;Quincy A. Shaw McKean, supra;Leland Hazard, 7 T. C. 372; Solomon Wright, Jr., 9 T. C. 173; George W. Carnrick, supra.Cf. Carter-Colton Cigar Co., 9 T.C. 219">9 T. C. 219; Alamo Broadcasting Co., 15 T.C. 534">15 T. C. 534. The petitioner made unsuccessful efforts over a long period of time to rent the property from which*242 she ultimately sustained the loss. Cf. Solomon Wright, Jr., supra.It was held in some of the above cases involving years prior to 1942 that the loss was an ordinary one in so far as the building was concerned but the loss on the land was a capital loss. That distinction between the loss on the land and the loss on the building was eliminated by section 151 (a) of the Revenue Act of 1942 which amended section 117 (a) (1). Senate Finance Committee Report No. 1631, 77th Congress, Second Session, p. 119. Leland Hazard, supra;Solomon Wright, Jr., supra.The recent case of Estate of Maria Assman, 16 T. C. 632, is distinguishable because in that case the widow made no effort to rent the property. The petitioner's loss in the present case was not a capital loss.
Decision will be entered under Rule 50.