13 B.T.A. 1239 | B.T.A. | 1928
Lead Opinion
The petitioners claim that the respondent erred (1) in his disallowance of, as a sales cost, the $15,000 claimed as commissions paid; (2) in his determinations of depreciation to improvements and personal property conveyed; (3) in excluding from the value of the property sold a merchandise inventory of $4,895; (4) in his determination of profit realized on said sale during the taxable years; (5) in excluding from the value of the personal property the sum of $27,000, representing tenants’ accounts; and (6) in excluding from the cost of property sold the amount of petitioner W. D. Parker’s interest in the growing crops.
The evidence is deplorably lacking in many essential features of this case and the record leaves so much for conjecture that it is extremely difficult to arrive at a satisfactory conclusion. The meager evidence concerning the first three assignments of error supports the action of the Commissioner, which is approved.
In support of the fourth assignment, petitioners claim that that part of the gross sales price intended to represent consideration for the personal property conveyed was not, under the terms of the deed, included in the installment payments evidenced by the serial notes maturing after January 10, 1920, but was payable out of the first cash payment of $10,000, and the subsequent payments, aggregating $240,000, made during the taxable years; and that the Commissioner erred in classifying the sale of the personalty as an installment sale, and should have deducted its value from the payments made during these years, before reckoning the profits for such years. In support of this contention petitioners cite that part of the deed, herein-above set forth, which provides “ that the lien retained on the personal property shall be canceled when the sum of $250,000 shall be paid on or before January 10, 1920.”
Petitioners’ further contention that there was no profit realized during the taxable years, on this sale, for the reason that the total payments received were less than the cost as determined by the Commissioner and also for the further reason that the notes received on the sales price were without value, is not supported by the record. The Commissioner correctly classified this transaction as an installment sale and properly apportioned the profits reportable thereunder as collected for the taxable years.
As to the tenants’ accounts, the evidence shows that they were debts owing to the petitioner for merchandise sold and were to be paid after the crops were marketed, he in the meantime retaining a lien upon the tenants’ crops to insure payment. The contention of respondent that they were a business expense of petitioner would have merit had the petitioner been in actual personal operation of the plantation and the tenants been in his employ at wages from which these accounts were deductible, but the evidence indicates that the tenants were farming on their own account and that Parker was their landlord and not their employer. These accounts were living expenses of the tenants and formed no part of the cost of Parker’s interest in the’crops. They were, therefore, subject to sale; were sold; and should have been included in the valuation of the property of petitioner W. D. Parker when sold, thereby reducing by the amount thereof the profits realized from the sale of the land.
Decision will be entered under Rule 50.