
    James M. Hays and Florence C. Hays, Petitioners, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 14303.
    Promulgated September 4, 1928.
    
      Jamies M. Hays for the petitioners.
    
      Franh S. Easby-Smith, Esq., for the respondent.
   OPINION.

Murdock:

We must assume that the basis of $12,160.61 used by the Commissioner was correct and the mortgage for $6,000 given by the petitioners before they sold the property did not represent additional cost not accounted for in that basis. The petitioners in 1920 parted with a'property which had cost them $12,160.61 and on which they had secured a loan of $6,000. In selling this land they had to pay a commission of $5,000.

The petitioners sold their land subject to the $6,000 mortgage. They concede that the land at all times during 1920 was worth at least $10,000 and was ample security for the mortgage. Thus, it is apparent that after the transfer the mortgage would be repaid not by the petitioners, but by either the owner of the land or by proceeds from a sale of the land on a foreclosure of the mortgage. Under these circumstances it was worth $6,000 to the petitioners to sell the land subject to the mortgage.

The petitioners’ profit on the sale of their land for income-tax purposes should be computed as of the date of the sale. If the notes which the petitioners received were at that time worth their full face value, the profit from the transaction would have been considerably more than $16,413.56. The facts indicate that the petitioners realized profit from this sale in at least this amount.

The Commissioner seeks to have the deficiency increased, but has failed to prove facts which would justify an increase in the deficiency. We therefore leave the parties as we have found them.

Judgment of a deficiency of $926.59 for the calendar year 1920 will he entered.  