HELEN E. LEATHERBEE AND STATE STREET TRUST COMPANY v. COMMISSIONER OF INTERNAL REVENUE
| Decision Date | 24 March 1936 |
| Docket Number | Docket No. 51513. |
| Parties | HELEN E. LEATHERBEE AND STATE STREET TRUST COMPANY, EXECUTORS U/W ROBERT W. LEATHERBEE, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Percy E. Gleason, Esq., Frank A. Lynch, Esq., S. F. Moody, Esq., Hubert Van Hook, Esq., and Harry J. Gerrity, Esq., for the petitioners.
Bruce A. Low, Esq., L. H. Rushbrook, Esq., and R. C. Grauer, C. P. A., for the respondent.
Respondent determined deficiencies in income tax against petitioners' decedent for the years 1925 and 1926, in the respective amounts of $2,523.40 and $37,560.22.
Petitioners assign as error in both determinations, the basis respondent used in computing the taxable gain of petitioners' decedent, received in both years, on the sale of real estate in 1925. They assign error, also, to the determination of the deficiency for 1926, in the disallowance of decedent's deduction on his income tax return for that year, of part of an alleged debt as having become worthless during that year.
The proceeding was submitted on a stipulation of fact, together with exhibits and oral testimony. We make the following findings of fact.
FINDINGS OF FACT.
Prior to March 1, 1913, petitioners' decedent purchased 197.504 acres of land in Shields Township, Lake County, Illinois. He paid either $200 per acre or $100 per acre for almost the entire acreage. The purchase price for the comparatively trifling remainder is not disclosed. The fair market value of this 197.504 acres on March 1, 1913, was $400 per acre.
On April 29, 1911, petitioners' decedent was the assignee of a certain lease and option to purchase, executed on March 9, 1911, covering 147.228 acres in the same township as the foregoing tract. This lease and option, after stating the date and parties thereto, contains the following material provisions:
WITNESSETH, that the said parties of the first part, in consideration of the covenants of the party of the second part, hereinafter set forth, do by these presents lease to the said party of the second part, his heirs and assigns, the following described real estate and property, to-wit: Description of the premises to have and to hold the same to the said party of the second part, his heirs and assigns for the term beginning the Fifteenth day of March, A. D. 1911, and ending the Fifteenth day of March, A. D. 1914.
And the party of the second part, his heirs and assigns, in consideration of the leasing of the said premises, as above set forth, covenants and agrees with the parties of the first part to pay the said parties of the first part, as rent for the same, the sum of Three Thousand Six Hundred ($3,600.00) Dollars, payable in semi-annual payments of Six Hundred ($600.00) each, as follows, to-wit: Dates and place of payment.
And the said party of the second part, his heirs and assigns, covenants with the parties of the first part that at the expiration of the term of this lease he will yield up the premises to the parties of the first part without further notice, in as good condition as when the same were entered upon by the said party of the second part, loss by fire or inevitable accident, and ordinary wear excepted.
It Is Further Agreed by the said parties of the first part that they will pay all assessments and taxes that may be levied upon said premises during the term of this lease, and will keep the buildings and improvements on said premises insured in responsible insurance companies against damage or loss by fire, and pay all premiums on said insurance during the term of this lease.
It Is Further Agreed by the said party of the second part, his heirs and assigns, that he will keep said premises and the improvements thereon and all fences in good repair.
* * * * * * *
And It is Further Expressly Agreed between the parties hereto that if default shall be made in the payment of the rent above reserved, or any part thereof, or in any of the covenants or agreements herein contained, to be kept by the said party of the second part, his heirs, executors, administrators or assigns, it shall be lawful for the parties of the first part, or their legal representatives into and upon said premises, or any part thereof, either with or without process of law, to re-enter and re-possess the same; and in order to enforce a forfeiture for non-payment of rent, it shall not be necessary to make a demand on the same day the rent shall become due, but a demand and refusal or failure to pay at any time on the same day, or at any time on any subsequent day, shall be sufficient.
And It Is Further Expressly Agreed between the parties hereto that, for and in consideration of Five Hundred ($500.00) Dollars, paid to the said parties of the first part by the said party of the second part, said parties of the first part do hereby give to the said party of the second part, his heirs and assigns, the privilege of purchasing the said described premises, at and for the price of Two Hundred ($200.00) Dollars per acre; the exact number of acres to be determined by a survey; said sum of money to be paid in cash or in such other manner as the said parties may mutually agree. Said party of the second part, his heirs and assigns, will have the right to exercise said option at the end of any one of said three (3) years, for which this lease of said premises runs, by giving sixty (60) days notice thereof, in writing, to the said parties of the first part, or their agent, of his election so to exercise said option.
Said parties of the first part also agree to furnish an abstract of title, showing good title to said real estate and premises.
In case the privilege of purchase, hereby given, is exercised, and the price above named paid or secured, as above provided, the said parties of the first part agree to convey and assure the said real estate and premises to the said party of the second part, his heirs or assigns, by good and sufficient warranty deed, free and clear of all liens or incumbrances whatsoever.
It Is Also Further Agreed by said parties of the first part that, in case the privilege of purchase, hereby given, is exercised, then the Five Hundred ($500.00) Dollars, herein paid by the said party of the second part, as the consideration for this privilege of purchase, shall be credited on the purchase price herein provided for.
It Is Further Understood And Agreed between the parties hereto that if said privilege of purchase is exercised by said party of the second part, his heirs or assigns, that this lease shall thereupon terminate, and no further rent shall be payable under said lease.
The Said Parties Of The First Part hereby appoint and constitute Edward F. Gartley, of Waukegan, Illinois, their agent, to collect and receipt for the rent herein provided; and they further constitute the said Edward F. Gartley as their agent to receive the notice herein provided to be given by the said party of the second part, his heirs or assigns, of his said privilege of purchase, herein provided for, and said notice shall be sufficient and binding on said parties of the first part when the same is given to the said Edward F. Gartley, by mailing same to his last known post office address, within the time above provided for.
It Is Further Agreed by the said parties of the first part that during the term of this lease, and during the existence of said privilege of purchase, said lease and said agreement for said privilege of purchase, shall be binding on the heirs, executors, administrators and assigns of the parties heret...
To continue reading
Request your trial