
    Carolina Light and Power Company, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 43005.
    Promulgated May 11, 1931.
    
      
      Francis J. Sweeney, Esq., for the petitioner.
    
      Philip A. Bayer, Esq., for the respondent.
   OPINION.

Seawell:

The petitioner, in 1905, drilled a well on its land at Aiken, S. C., at a cost of $5,396.99. The sole purpose in drilling the well was to obtain water in sufficient quantity to operate an ice plant. The well proved to be a failure, was capped in the same year, and the ice plant project was then abandoned. The petitioner contends that the cost of drilling the well should be added to $2,500, the original cost of the land, in order to ascertain the profit or loss (under section 204 (b) of the Revenue Act of 1926) realized when the land was sold. The drilling of the well should not be added to the cost of the land; it was a business enterprise and when abandoned was a loss to the petitioner in the year of abandonment. Tom (Fayette T.) Moore, 19 B. T. A. 140. It could not, therefore, affect income for either 1916 or 1925.

The petitioner contends there was no consummated sale of the land in 1916, when it and Louis Carroll entered into the contract of sale and purchase denominated a bond for title. With this contention we agree and hold with the petitioner.

There is a wide difference between a deed for land and a title bond. The one is the evidence of an executed contract, the other is the evidence of an unexecuted contract; the former is evidence that a sale has been made, the latter that a sale is to be made; the one is a sale, and the other a contract for a sale. Moseby v. Partee, 5 Heisk. (Tenn.) 30; Peterson v. Reichman, 93 Tenn. 71; 23 S. W. 53. See also Faddell v. Taylor (Com. App., Texas), 239 S. W. 931; B. P. Jones & Co. v. Cash, 226 S. W. 352; 190 Ky. 96.

But under this contract for sale and purchase Carroll paid the petitioner $300 in addition to certain interest and taxes. This amount of $300 reduced the original cost of the land, $2,500, to the petitioner to the sum of $2,200. Under the stipulated facts Louis Carroll surrendered his bond for title and contract, and consented to the making of a deed by the petitioner to one B. S. Thomas in 1925. Upon the execution of the deed to Thomas the petitioner received the sum of $1,883.06, which substracted from the $2,200, the remaining cost of the property in the hands of the petitioner, leaves $316.94, the amount of the petitioner’s loss in the transaction in that year.

Judgment will be entered under Rule 50.  