Koepfli

This is a petition to review orders of the United States Board of Tax Appeals, redetermining income taxes of petitioners for the year 1922. The controlling facts are conceded, and a question of law is presented whether or no, in determining the gain in 1922 on the sale of property acquired prior to March 1, 1913, when the basis is cost or March 1,1913, value, whichever is greater, it is required under section 202 (b) of the Revenue Act of 1921 ( 42 Stat. 229 ) that the cost basis be reduced by depreciation accrued or sustained prior to March 1,1913.

In 1905 petitioners purchased a tract of 6.24 acres of land in the city of Los Angeles for a consideration of $94,610.74. In 1907 they "put up a concrete building on the property at a cost of $94,134.19. During the following two years other improvements were erected at a cost of $5,565.65. The property, inclusive of land and improvements, was sold in 1922. for $500,000; the net to petitioners being $476,179.90. The respondent determined the March 1, 1913, value of the property to be $345.463.54, resulting in a net taxable gain of $152,901.39, or $50,967.13 to each of the appellant partners. Petitioners appealed from the Commissioner’s…