1932 BTA LEXIS 1501 | B.T.A. | 1932
Lead Opinion
Section 206 (a) (1) of the Revenue Act of 1921 reads as follows: “ The term ‘ capital gain ’ means taxable gain from the sale or exchange of capital assets consummated after December 31, 1921.”
It appears that the deficiency which has been determined by the respondent in this case resulted from the refusal of the respondent to treat as a capital net gain the sum of $96,028.99 which was included in the income reported by the petitioner for 1923. It has been stipulated that the item of $1,458.03 should be excluded from petitioner’s jncome for 1923 because it was received and reported in 1922, and
In Theodore J. Swift, 20 B. T. A. 1099, we considered a situation very similar to that presented herein. There was involved a sale of real property situated in California, the deeds to the property having been deposited in escrow in accordance with an agreement to sell dated March 4, 1921, delivery of the deeds to await a final payment on the purchase price to be made in 1924. The payments provided for in the agreement to sell were finally completed and the deeds were delivered to the purchaser in 1924. We held that title to the property did not pass from the vendor until 1924, when the deeds were delivered, and that with respect to the profit resulting from the transaction the vendor was entitled to have his tax liability computed under the capital gain provisions of the Revenue Act of 1924. This decision was affirmed by the Circuit Court of Appeals for the Ninth Circuit on January 5, 1932, 54 Fed. (2d) 746. See also Charles W. Dahlinger, 20 B. T. A. 176, which involved the question whether profits on the sale of certain stock should be taxed as a capital gain at the rate of 12% per cent. In that case title to the stock passed to the purchaser in 1920, but the full purchase price was not paid until after December 31, 1921. We held that the sale was consummated when the title passed to the purchaser and that the seller’s profits were not taxable under the capital gain provisions of the Revenue Act of 1921. This decision was affirmed by the Circuit Court of Appeals for the Third Circuit, 51 Fed. (2d) 664, certiorari denied by the United States Supreme Court, 52 Sup. Ct. 128.
In the instant case it is stipulated that none of the deeds covering the property described in the contracts of sale involved herein was delivered prior to December 31, 1921. Under the authority of the above decisions we hold that the sales in question were not consummated until after December 31, 1921, and the taxpayer-is entitled to the benefit of the capital gain provisions of the statute.
Reviewed by the,Board.
Judgment will be entered under Rule 60.