Week

Edmund R. Week and his brother, John Arthur Week, between the years 1904 and 1911 purchased 158.6 acres on the Spokane river and acquired in addition thereto riparian and flowage rights on each side of the river for a distance of about four and one-half miles; the purpose being to acquire a reservoir site for the development of electric power. In 1923 the property was sold for $200,000. The Commissioner fixed the gain for the year 1923 at $156,745.40, being the difference between the sale price of $200,000 and the actual cost of the property, $43,254.-50. This gain he divided equally between Edmund R. Week and the estate of John Arthur Week who had died after the property was sold. From this proposed deficiency the petitioners appealed to the Board of Tax Appeals, which sustained the finding of the Commissioner.

The sole question presented on the appeal is whether or not the fair market value of the property in question on March 1, 1913 exceeded its cost. The controlling statute in that regard is the Revenue Act of 1921, e. 136, 42 Stat. 227 :

The burden of establishing that the fair market value of the property exceeded its cost was upon the petitioners. The determination of…