
    J. L. Johnson, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 10748.
    Promulgated October 17, 1927.
    March 1, 1913, value of land determined.
    
      Franklin T. Duprew, Esq., for the petitioner.
    
      J. Harry Byrne, Esq., for the respondent.
   Akundell:

The Commissioner has determined a deficiency in income taxes for the year 1919 in the amount of $2,066.95.

The only question in dispute is the March 1, 1913, value of a tract of land which petitioner sold in 1919.

FINDINGS OF FACT.

Petitioner acquired prior to March 1, 1913, approximately 600 acres of land. Subsequent thereto he placed improvements on the land to the value of $10,400. In 1919 he sold the property for an agreed price of $60,000 and received in part payment certain notes, which notes were, within the taxable year sold at a discount of $5,000, making the net amount realized from the sale $55,000.

The land lies on a divide between the Black River and the Cape Fear River in Arnett County, 1ST. C. It is comparatively level and all but 50 acres is adaptable for the raising of crops. Tire soil is a sandy loam particularly suitable for the cultivation of tobacco, cotton and corn.

The land is located about twro miles from the town of Angier, which was incorporated in 1901 and in 1913 contained between 400 and 500 people. In 1907 there was erected in Angier a High School which was attended by the children of the farmers in the neighborhood. A railroad runs through the property and a railroad siding is located on it. These facilities were constructed prior to March 1, 1913. In 1910 a number of people interested in the raising of tobacco moved into the neighborhood of the petitioner’s land and in the same year a tobacco market was established some 7 or 8 miles away. This movement served to create an interest in the land for the growing of tobacco and caused land values to materially increase.

In determining petitioner’s tax liability respondent placed a value on the land as of March 1,1913, of $24,000. The fair market value as of March 1, 1913, of the 600 odd acres of petitioner’s land which he sold in 1919 was $40,000 and this figure should be used in determining his taxable profit on the sale. The cost of the land was less than its value on March 1,1913.

Judgment will be entered on 15 days’ notice, under Rule 50.

Considered by Lansdon and Gkeen.  