
    Calvin Crouse, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 3717.
    Promulgated May 14, 1928.
    
      F. E. Northrup, Esq., fo.r the petitioner.
    
      A. H. Murray, Esq., for the respondent.
   OPINION.

Teussell :

This record contains the testimony of two experienced dealers in Iowa farm lands and farm loans who testified at length to market values of farm property as of March 1, 1920, and also as to such values of farm mortgage loans made on the basis of the then prevailing selling prices. The testimony is convincing that there were many sales of farms made in the State in 1919 and 1920, at grossly inflated prices; that such prices were far in excess of any intrinsic values in farm property and that practically all of the buyers during those years were people who expected to make a quick turnover of their purchase and had no thought of retaining properties for farming purposes. They also agreed that there was no true market for farm mortgages taken during those years at the prevailing inflated prices, although there were occasionally found persons who would buy such mortgages at discounts ranging from 40 to 50 per cent. All of this testimony taken as a whole convinces us that the note and mortgage taken by the petitioner on March 1, 1920, had a then value of not in excess of 60 per cent of its face, or $17,520. Upon this basis petitioner received for his farm cash and mortgage notes aggregating a value of $37,520. The depreciated March 1,1913, value of his farm and cost of additions to the buildings thereon was $26,880, his net gain, therefore, upon the transaction was $10,640.

Petitioner’s income-tax return for the year 1920 should be amended in accordance with the findings of fact and this opinion and the deficiency or overassessment, as the case may be, recomputed upon that basis.

Judgment will be entered pursuant to Rule 50.  