The Collector appeals from a judgment of the District Court ordering that the Executor taxpayer be refunded income taxes in the sum of $10,287.52 plus $1,-388.82 interest which had been collected by the Collector, as due for the calendar year 1946. The District Court found that this sum was erroneously collected as taxes upon profits realized from the sale in 1946 of capital investments in two parcels of real property in San Francisco, California, one known as “553 Market” and the other as “Merrie Way”.

This property came under the executor taxpayer’s charge in November, 1938, when the appraised value of the estate was smaller than the estate’s lia bilities. The executor therefore determined to hold the property until a more advantageous sale was possible. He held the two parcels from 1938 until they were sold in 1946 for an amount exceeding the estate’s liabilities. We hold that the administration of the properties until their sale is a single integrated transaction. Cf. Sloane v. Commissioner of Internal Revenue, 6 Cir., 188 F.2d 254, 263 , 29 A.L.R.2d 580 .

The District Court, in determining the net income for 1946, allowed the addition of $7,990.41 of carrying charges to the basis of the properties. No deduction had been taken for these charges during the seven years the executor had held the parcels. The Court also ruled that $30,-673.68 of carrying charges were to be considered recoverable expenditures under Internal Revenue Code 22(b) (12), 26 U.S.C. § 22 (b) (12) and therefore excluded from the estate’s gross income for 1946. Deductions had been taken for these charges but they resulted in no tax benefit to the estate.

A. The $7,990.41 of expenditures for which the executor made no tax deductions in the prior tax years.

This total consists of two amounts, $5,421.59 expended in 1948 (T. 19) and a balance later deducted of $2,-568.82.

The pertinent provision of the Internal Revenue Code concerning this 1938 expenditure as an addition to the cost of the two parcels sold are:

The applicable provisions of Section 113(b) are as follows:

The executor having elected not to take a deduction of these expenditures from the estate’s income for 1938 is entitled to add this amount to the cost of the two parcels in determining the gain from the sales thereof. It is a “proper adjustment” under Section 113(b).

As to the remaining expenditure of $2,568.82, the executor admits that he has not sustained his burden of proof as to the years in which it was expended. We are required to assume that he made them after the year 1942 when Section 130 of the Revenue Act of 1942 author ized the Commissioner to make his regulation requiring the taxpayer to express, by filing in the return of the year of expenditure, his election either to deduct it in that year or treat it as chargeable to capital account. This he did not do. The district court erred in deducting this latter amount.

B. The District Court properly held “not to be included” in the gross income of the taxpayer for the year 1946 the $30,673.68 deducted in prior tax years without tax benefit.

The parties agree that this $30,673.-68 of the deductions in prior tax years gave the taxpayer no tax benefits. The Collector contends, inter alia, that the regulations relied upon by the District Court are not applicable because this expenditure in the course of the administration of the capital investments was not a part of a single integrated transaction.

The District Court considered this a question of tax accounting methods, took the testimony of experts in tax accounting and upon sufficient evidence held that the estate’s administration of the properties involved was such a single integrated transaction.

The case is like Dobson v. Commissioner, 320 U.S. 489 , 64 S.Ct. 239 , 88 L.Ed. 248 , where taxpayer had suffered a loss on stock, the deduction of which produced no tax benefit to taxpayer. In a later year he recovered damages from his vendor and excluded this recovery from his gross income. The Supreme Court held that this was proper; the taxpayer had enjoyed only a return of capital.

Pertinent to this is the dictum in Sloane v. Commissioner, 6 Cir., 188 F.2d 254, 262 , 29 A.L.R.2d 580 , concerning the necessary relationship between the events causing the loss and recovery:

Burnet v. Sanford & Brooks Co., 282 U.S. 359 , 51 S.Ct. 150 , 75 L.Ed. 383 , in which a corporation was denied the deduction from the profits of a tax year of its losses in the normal course of business in prior years, does not present the situation of the single integrated transaction of an executor endeavoring to take his estate out of bankruptcy by waiting for a sale at an increased valuation of the two parcels of land in question. If it does so hold it is overruled by the Dobson case.

The District Court held the $30,673.68 to be excluded from the gross income of the tax year 1946, relying upon 26 U.S. C. 22(b) (12) and the Commissioner’s regulations thereunder 29.22(b) (12)-1. 26 U.S.C. § 22 (b) (12), so far as pertinent, provides:

The Commissioner’s regulation (29.22 (b) (12)) made pursuant to the last above paragraph, so far as pertinent, reads:

The regulation thus includes “all other losses and expenditures” such as the interest included in the $30,673.68. There is no merit to the Commissioner’s contention that interest is not a part of the exclusions of the statute.

Contrary to appellee’s contention, we think the statement of points adequately raises the above issues. The judgment is affirmed save as to the exclusion of $2,568.82. The case is remanded to the District Court to determine the tax refund based upon the exclusion of that amount.

. “§ 24. Items not deductible “(a) General rule. In computing net income no deduction shall in any case be allowed in respect of— ****** “(7) [As added by Sec. 130 of the Revenue Act of 1942, supra.] Amounts paid or accrued for such taxes and carrying charges as, under regulations prescribed by the Commissioner with the approval of the Secretary, are chargeable to capital account with respect to property, if the taxpayer elects, in accordance with such reguiations, to treat such taxes or charges as so chargeable. * * * [26 U.S.C. 1946 ed., Sec. 24.] ” Treasury Regulation 111 Sec. 2922(b) (12)-1 provides in sub. par. (c): “Manner of exercising election. — If the taxpayer elects to capitalize an item or items under this section, such election shall be exercised by filing with the original return a statement for that year indicating the item or items (whether with respect to the same project or to difiier-ent projects) which the taxpayer elects to treat as chargeable to capital account (either as a component of original cost or other basis, for the purposes of section 113(a), or as an adjustment to basis, for the purpose of section 113(b) (1) (A) ).”■