*655OPINION.
Korner:Taxpayer contends that it should be allowed for purposes of invested capital in the years 1920,1921, and 1922, an amount of $202,000, such amount representing the actual cash value of certain real estate purchased by the taxpayer with shares of its capital stock of the par value of $202,000, and that the portion of such valuation representing the value of the buildings thereon at the date of purchase should be included in determining the deductions allowable on account of exhaustion, wear and tear thereof.
The pertinent provisions of law relative to invested capital for the years 1920, 1921, and 1922, are contained in section 326(a) (2) of the Revenue Act of 1918 and section 326(a) (2) of the Revenue Act of 1921. The sections which are identical are as follows:
Sec. 320. (a) That as used in this title the term “invested capital ” for any year means (except as provided in subdivisions (b) and (c) of this section) : * * *
(21 Actual cash' value of tangible property, other than cash, bona fide paid in for stock or shares, at the time of such payment, but in no case to exceed the par value of the original stock or shares specifically issued therefor, unless the actual cash value of such tangible property at the time paid in is shown to the satisfaction of the Commissioner to have been clearly and substantially in excess of such par value, in which case such excess shall be treated as paid-in surplus.
The evidence in this case, briefly summarized, shows that on February 22, 1916, George H. Ely sold the property under consideration herein for $70,000, an amount which he considered, and which has been shown to be, much less than its actual value at that time. In our opinion that sale is not controlling in determining the value of the property on February 1, 1917. In a sense, it was not an arm’s length transaction, inasmuch as Ely was in the urgent necessity of immediately raising cash and was placed in the dilemma of sacrificing this particular property at a price less than its real value, or foregoing the opportunity to realize large profits by the exercise of his option to purchase the entire stock of the Ely Realty Co. Ely, who, as far as the record discloses, has no interest in the outcome of this appeal, testified that the property was worth much more than $70,000 on February 22, 1916, and that on February 1, 1917, it had a value of $250,000.
Other disinterested witnesses testified as to the value of the property on February 1, 1917. It appears from their testimony that these witnesses have had long experience in appraising real estate and were familiar with real estate values in Elyria, as well as with the value of this particular real estate at the time of its sale. They testified unqualifiedly that there was a great increase in the value of real estate in Elyria during the period February, 1916, to February, 1917, and that the land and buildings purchased by the taxpayer had a cash or market value on February 1, 1917, of at least $250,000. The Deputy County Auditor of the county in which Elyria is situated testified that the property in question was appraised for taxation in the year 1917 at $167,000, which was about two-thirds of its actual value. It was also shown that one of the *656buildings on the property had cost the Ely Kealty Co. about $103,-000 to erect, and that on February 1, 1917, it was in good state of repair.
The evidence in this case convinces us that the real estate purchased by taxpayer on February 1, 1917, had a value of at least $202,000 at that time. Stock of the par value of $202,000 was issued therefor. The value of the real estate having been established to be at least $202,000 at the date of its acquisition by taxpayer, and that amount not being in excess of the par value of the stock issued therefor, we are of the opinion that taxpayer is entitled to include in invested capital on account of this real estate, in the years 1920 to 1922, inclusive, the amount of $202,000. The amount of $109,307.71, being the sum of $74,839.51 representing value of land and $34,468.20 representing buildings, should be restored to taxpayer’s invested capital.
In view of our conclusion as to the value of the real estate on February 1, 1917, it follows that the value of the buildings disallowed by the Commissioner in the amount of $34,468.20 should be included in the basis for computation of depreciation and that a deduction of $1,378.73 should be allowed on that account in each of the years 1920, 1921, and 1922.