1928 BTA LEXIS 4035">*4035 1. JURISDICTION. - The Board has no jurisdiction to redetermine decedent's tax liability for the year 1920 for which year respondent has not determined a deficiency, under authority of Cornelius Cotton Mills,4 B.T.A. 255">4 B.T.A. 255.
2. PROFIT FROM SALE OF LAND. - Contract involved herein construed to be not a conveyance, but rather an agreement made in August, 1920, for a conveyance to be made in 1921. Held, the sale was consummated and profit therefrom derived in year 1921.
10 B.T.A. 799">*799 This proceeding is for the redetermination of the income-tax liability of William Griffith, who died July 24, 1924, for the calendar years 1920 and 1921. The respondent's letter dated April 5, 1925, asserts a deficiency in the amount of $928.61 for the year 1921 and an overassessment in the amount of $804.67 for the year 1920.
The petitioners allege that the respondent erred in his determination (1) that decedent's 80-acre farm was not sold in 1920; (2) that the profit therefrom was not taxable for the year 1920; and (3) that1928 BTA LEXIS 4035">*4036 the sale was made in 1921 and the profit was taxable for the year 1921.
FINDINGS OF FACT.
W. L. and J. D. Griffith, individuals and residents of Pottawattamie County, Iowa, are the administrators of the estate of William Griffith, who died intestate on July 24, 1924.
On or about August 3, 1920, the decedent suffered a loss by theft of $20,000, which amount had been borrowed from a bank. In the computation of the decedent's tax liability for the year 1920, the respondent allowed the said loss as a deduction.
In 1920, the decedent owned 80 acres of unimproved and unoccupied farm land which adjoined the farm upon which he lived. The 10 B.T.A. 799">*800 land was fenced and the decedent farmed it. In the fall of 1920 the decedent entered into a written contract as follows:
LAND SALE CONTRACT (Revised)
THIS ARTICLE OF AGREEMENT, Made and entered into this 14th day of August 1920 by and between William Griffith of County of Pottawattamie, State of Iowa, party of the first part, and Clarence Sievers of the State of Iowa, party of the second part, WITNESSETH, That in consideration of the sum of Thirty Thousand DOLLARS ($30,000.00) the party of the first part has this day sold to1928 BTA LEXIS 4035">*4037 the party of the second part the following described property, situated in the City of , County of Pottawattamie, State of Iowa, to-wit: North Half (1/2) of Northwest Quarter (1/4) of section twenty eight (28) Township seventy seven (77) North Range Thirty Eight (38) west of the 5th P.M., containing in all 80 acres more or less. And in consideration of the said property the party of the second part does agree to pay to the party of the first part the sum of Thirty Thousand DOLLARS ($30,000.00) in the manner following, viz: Seven Thousand Dollars, ($7,000.00) on the execution of this contract, the receipt whereof is hereby acknowledged. And the remaining sum of Twenty Three Thousand ($23,000.00) to be paid as follows: Twenty Three Thousand Dollars cash in hand March 1st, 1921, Walnut, Iowa.
The party of the first part agrees to pay to the party of the second part 6% interest on Forty Five Hundred Dollars of the seven thousand dollars earnest money that is paid on this contract, from the 14th day of August, 1920, to March 1st, 1921, at the time that a good and sufficient warranty deed and abstract of title showing good, clear, merchantable title to the said property is made and1928 BTA LEXIS 4035">*4038 delivered to the party of the second part, by the party of the first part or his representative, which deed and abstract the party of the first part agrees to furnish and deliver to the party of the second part at Walnut, Iowa, State of Iowa, on or before the 1st day of March, 1921. The party of the first part to give full possession of the said property to the party of the second part on or before the 1st day of March, 1921, and it is agreed and understood that the party of the first part shall not remove from the said premises, burn or destroy in any way after the date of this contract, any buildings, fences, boards, posts, wire or any other articles either useful or ornamental belonging to and forming a part of said property, except,
It is further agreed that the abstract of title shall be submitted to Second party for examination, on or before the 1st day of February, 1921, and second party shall report on same within 15 days after same is submitted, as to defects therein, and any defects not so reported on shall be deemed as waived.
And it is expressly agreed that the time and times of payment of said sums of money, as aforesaid, is the essence and important part of the1928 BTA LEXIS 4035">*4039 contract; and that if any default is made in any of the payments or agreements above mentioned to be performed by the party of the second part, in consideration of the damage, injury and expense thereby resulting, or that may be incurred by or to the party of the first part thereby, foregoing agreement shall, at first party's option, be void and of no effect, and the party of the second part shall have neither claim in law nor equity against the party of the first part, nor to the above mentioned real estate, nor any part thereof; and any claim or interest, or right, the party of the second part may have hereunder up to that time by reason hereof, or of any payments and improvements made hereunder, shall, on all such default, cease and determine, and become forfeited, without any declaration of forfeiture, re-entry, or any act of the party of the first part, 10 B.T.A. 799">*801 the same being agreed upon as liquidated damages, but this shall not affect the right to compel specific performance.
Witness our hands, the day and year first above written.
(Signed) WILLIAM GRIFFITH
CLARENCE SIEVERS
The decedent realized a profit of $16,000 from the sale of the said 80 acres of farm land.
1928 BTA LEXIS 4035">*4040 The decedent received $7,000 cash on August 14, 1920, and some time during February, 1921, he received $23,000 cash, at which time he delivered the deed to the property. Sievers, the vendee, took possession of the property in February, 1921, as soon as he received the deed.
The taxes on the 80 acres of farm land for the year 1920, payable in 1921 were paid by the decedent. The decedent retained possession of the said farm land and raised and harvested his crops thereon during the year 1920.
In his income-tax return for the year 1920, the decedent included in gross income the $7,000 received as above stated and for that year paid an income tax in the amount of $804.67. For the year 1921, he included in gross income the $23,000. In computing the decedent's tax liability for the years 1920 and 1921, the respondent, after allowing a deduction of the $20,000 loss, determined that there was no tax liability for the year 1920; that the 80 acres of farm land were sold in 1921 and he included $30,000 in gross income for the year 1921, resulting in the deficiency involved herein. The respondent has never determined a deficiency in decedent's tax liability for the year 1920.
1928 BTA LEXIS 4035">*4041 OPINION.
TRUSSELL: The Board has no jurisdiction to determine the decedent's tax liability for the year 1920, under authority of .
The respondent has taken the position that the sale in question was made in 1921 upon the furnishing of an abstract of title, the delivery of the deed and possession of the land and he has included the $16,000 profits in income for the year 1921. The petitioners contend that the sale was made in 1920 and that the $16,000 profits are taxable for the year 1920.
The question presented for determination is whether under the agreement set out in the findings of fact, there was a sale of the land in 1920 or whether the sale was made in February, 1921.
The petitioners have stressed the point that the agreement provides "has this day sold," and contends that those words must be taken as meaning a present conveyance on the date of the agreement. The main rule of construction of agreements is to ascertain and give effect to the intention of the parties as expressed in the agreement; 10 B.T.A. 799">*802 and to this end the contract or agreement should be construed as a whole and greater regard given to the1928 BTA LEXIS 4035">*4042 intention as shown by the entire agreement, than to the separate meaning of any particular words or expressions.
In the case at bar, the agreement had not been completed during 1920 and its terms provided for certain acts to be performed during 1921 when the sale was consummated. A reading of the whole agreement makes it clear that the instrument was not intended as a conveyance of the property on August 14, 1920, but rather as an agreement for conveyance on or before March 1, 1921. That the decedent's ownership during 1920 was subject to equities arising in favor of the obligee, is not material in this proceeding which is for the purpose of determining whether decedent derived the profits in question during 1920 or 1921.
The case of ; , is briefly as follows:
A contract executed September 26, 1900, recited that defendant "has this day sold" plaintiff certain premises, the purchase price to be paid in specified payments, and that defendant "agrees to give" plaintiff "a good and sufficient warranty deed * * * and possession on March 1, 1901, if payments are made in accordance with this contract." 1928 BTA LEXIS 4035">*4043 Plaintiff performed his part, and on the agreed date, defendant executed a deed and gave plaintiff possession. Code § 1400, provides that, as between vendor and vendee tax liens attached on and after December 31st of each year, and taxes on real estate are required to be paid by the owner. Held, that the contract was not a conveyance, but a mere agreement for conveyance, and that defendant was still the owner of the premises at the time the taxes for 1920 became a lien thereon, and was liable for such taxes.
We are of the opinion that the determination of the Commissioner must be sustained.
Judgment will be entered for the respondent.