1932 BTA LEXIS 1079 | B.T.A. | 1932
Lead Opinion
Except as otherwise provided in section 202 of the Revenue Act of 1926, gain or loss under that act is the difference between the amount realized from a sale and the basis provided in subdivision (a) or (b) of section 204. Section 204 (b), which is applicable here, provides that the basis shall be the fair market value of the property as of March 1, 1913. This must be diminished by depreciation allowable up to the date of sale. Section 202 (b) (2). The parties have agreed upon March 1, 1913, value. There is no dispute about any figures nor is any argument made as to the effect of depreciation. The only question presented to the Board is whether or not, in computing gain or loss on the sale of the real estate, any adjustment should be made representing the cost or value of improvements made by the lessee. ■
The petitioner has not called our attention to any regulation which fits his case. Therefore, he must go back to section 202 (b) (1). What expenditure was properly chargeable to capital account in his case ? He made no actual expenditure. If he should argue that he acquired the building after February 28, 1913, so that the basis is cost, this basis is nihil, since the improvement cost him nothing. Furthermore, he is not in position to charge himself with any amount of increase in capital value as he might have been had he first taken some part of the increase into income. Prior to the sale he never recognized the receipt of any benefit from the expenditures made by his lessee. Until he has recognized the receipt of the asset, he can not set up capital value for it.
Reviewed by the Board.
Decision will ~be entered wider Bule 50.