Nichols v. Commissioner of Internal Revenue
| Decision Date | 11 October 1930 |
| Docket Number | No. 4313.,4313. |
| Parties | NICHOLS v. COMMISSIONER OF INTERNAL REVENUE. |
| Court | U.S. Court of Appeals — Third Circuit |
Wm. W. Booth and W. A. Seifert, both of Pittsburgh, Pa. (Smith, Shaw, McClay & Seifert, of Pittsburgh, Pa., of counsel), for petitioner.
G. A. Youngquist, Asst. Atty. Gen., and J. Louis Monarch and Harvey R. Gamble, Sp. Assts. to Atty. Gen. , for respondent.
Before BUFFINGTON and DAVIS, Circuit Judges, and JOHNSON, District Judge.
This case is here on a petition to review the order of redetermination of the Board of Tax Appeals affirming the determination of the Commissioner of Internal Revenue.
The petitioner is an attorney at law residing in Waynesburg, Greene county, Pa. In October, 1920, he negotiated a sale to the General Investment Company of West Virginia, hereinafter called the company, of approximately 6,347 acres of undeveloped coal land situated in Marshall county, W. Va. In payment of the purchase price and commissions on the sale of the property, the company gave $29,140 of its notes, $525,000 of its bonds, and $71,804 in cash. The bonds were dated August 15, 1920, bore interest at 6 per cent., and matured over a period of seven years; $70,000 maturing each year for six years and the balance of $105,000 maturing the seventh year. They were secured by a deed to the property purchased.
The petitioner owned 46.5 acres of the land and sold it to the company with the other land for $4,625 in cash and for this he made a return in his income tax return for 1920. He further received from the company as commissions on the sale made through him three of the promissory notes of the company of a total face value of $14,000, dated August 15, 1920, and payable August 15, 1927, bearing interest at 6 per cent. and $11,000, face value, of the company's bonds also maturing on August 15, 1927. No interest has been paid on these notes or bonds since 1923.
Section 213 of the Revenue Act of 1918 (40 Stat. 1065) provides:
Article 33 of Regulations 45, then in force, provides that, "Where services are paid for with something other than money the fair market value of the thing taken in payment is the amount to be included in income." The petitioner did not include these bonds in his income tax return for 1920 for the reason that they had no market value.
It is admitted that the notes had no market value in 1920, when they were taken by the petitioner, but the Commissioner says that the bonds had a market value of $11,000 and on an audit of the petitioner's income tax return for 1920 he included the face value of these bonds of $11,000 and this caused a deficiency. The petitioner appealed to the Board of Tax Appeals. It sustained the Commissioner's determination and the question of the market value of the bonds in 1920 has been brought here for review.
The determination of the Commissioner is prima facie correct and must stand unless overcome by substantial evidence. United States v. Anderson, 269 U. S. 422, 46 S. Ct. 131, 70 L. Ed. 347; United States v. Mitchell, 271 U. S. 9, 46 S. Ct. 418, 70 L. Ed. 799; Wickwire v. Reinecke, 275 U. S. 101, 48 S. Ct. 43, 72 L. Ed. 184. It is likewise true that value is a question of fact and the finding of the Board of Tax Appeals must be sustained if based upon any substantial evidence. Avery v. Commissioner (C. C. A.) 22 F.(2d) 6, 55 A. L. R. 1277; Blair v. Curran (C. C. A.) 24 F.(2d) 390; Henderson Iron Works & Supply Co. v. Blair, 58 App. D. C. 114, 25 F.(2d) 538; Bishoff v. Commissioner (C. C. A.) 27 F.(2d) 91; Bedell v. Commissioner (C. C. A.) 30 F.(2d) 622; Powers Manufacturing Co. v. Commissioner (C. C. A.) 34 F.(2d) 255.
The weight of the evidence is a matter for the judgment of the Board of Tax Appeals and it is not...
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