Marsh & Marsh, Inc. v. Commissioner

1926 BTA LEXIS 2744 | B.T.A. | 1926

Lead Opinion

OPINION.

Murdock:

The petitioner would have us decide that the purchase price or cost of this property was not $42,000, as determined by the Commissioner, but was less than that amount, and was, in fact, $25,000. If facts, these matters were capable of proof and the burden of proving them was upon the petitioner.

In the contract it was stated that the purchase price was $250 in cash on the day of sale and 167 monthly payments of $250 each beginning on the first of the next month thereafter. These payments total $42,000. There is nothing in this contract which would indicate that the parties intended or considered that a part of the $42,000 was to be interest; indeed, it would appear that they intended the contrary.

The method of bookkeeping is not conclusive as to the amount of the purchase price, or cost, for obvious reasons, nor is the consideration mentioned in a deed executed and delivered at a date later than the years here in question. If stamps in a proper amount were canceled on the deed, that would indicate that the cash consideration was not more than a certain amount. But what of indebtedness assumed? We do not hold that these facts are without probative value, but merely that, in the light of the other facts in the case, the presumption of the correctness of the Commissioner’s determination has not been overcome.

There is an old proverb, hackneyed and worn, but still true, to the effect that a bird in the hand is worth two in a bush. It may be applicable in this case. A cash customer may be able to secure goods at a lower price than that demanded from one who offers only part cash and the balance in future payments. We know that the actual cash value of the premises on November 1, 1913, was not in excess of $25,000. But what does that tell us about the purchase price to one who offers $250 cash and 167 equal monthly payments of $250? The parties to this sale may have considered that all, or none, or a part of the deferred payments was interest. When the seller did not receive all of the purchase money in cash he took a risk. How can we say what portion of the excess over $25,000 he considered reimbursement for taking this risk, and how much he considered interest for the use of his money? Appeal of Carl Lang, 3 B. T. A. 417. The petitioner had the burden of proving facts necessary to the conclusion he desires us to reach; these facts were capable of proof, but have not been proven. We decline to relieve the petitioner by guessing, and therefore decide that the determination of the Commissioner must stand.

The Commissioner by an amended answer alleged that the petitioner’s capital stock and surplus' at the beginning of the year 1919 was reduced by $504.82, representing the prorated amount of the 1918 tax, whereas it should have been reduced by $1,194.55, representing the total tax liability for the year 1918. There was no proof offered in regard to this contention, no reference was made to it in argument or in briefs, and so far as it is concerned we hold in favor of the petitioner.

Judgment will be entered on notice of 15 days, under Bule 50.