*507OPINION.
Geeen:We are unable to determine the value of the property received in exchange for the stock. Certain witnesses testified that *508the directors believed that the applications and patents, at the time they were acquired, were worth the par value of the stock issued therefor. The prices at which the stock was subsequently placed on the market and sold indicate that there was no firm foundation for such a belief. There were no earnings either previous to the acquisition of the applications and patents or within five years thereafter. The only evidence introduced which tends to prove value was that relating to the sale of the first 1,186 shares of stock at $12.50 per share. These sales were in very small lots. They afford no basis for a determination of the value of the 20,000 shares transferred to Carr. It is possible that such a block of stock, being 50 per cent of the total authorized capital stock, would be worth considerably more per share than shares which were sold in small lots, but it is probable that, if a purchaser could have been found for such a block of stock, it would have been necessary to reduce the price considerably below that asked for the stock in small blocks. We are not unmindful of the difficulties attendant upon proof of value in a case of this kind, but this Board can only determine values from the evidence. Here the relationship between the values of the applications and patents and the price paid for very small blocks of stock is too remote to afford a criterion for the measure of the value of one by the value of the other.
We have heretofore held, in the Appeal of Dilling Cotton Mills, 2 B. T. A. 127, that where machinery is discarded as the result of change in business conditions, the taxpayer may deduct in such year the difference between the depreciated cost and the salvage value. The rule there announced is controlling here, and so much of the deficiency as arises from the refusal of the Commissioner to allow such deduction is disapproved.
On reference to the Board: