Westlake Public Market v. Commissioner

Petitioner seeks a review of the order of the Board of Tax Appeals made on its application for a reversal of the decision of the Commissioner of Internal Revenue fixing its income tax for the year 1926. The amount of tax involved is $9,505.62. This represents the tax on profit of the petitioner on the sale ■of a leasehold interest in real estate. The sale was made in 1926, and the price received was $200,000. The question is how much of the purchase price was profit. The petitioner contends that in determining the profit or gain there should be deducted from this selling price the sum of $50,000 which it claims is the cost to it of the lease at the time it was acquired on June 30, 1916. It is conceded that section 204 (a) of the Revenue Act of 1926 (26 USCA § 935) controls and that the basis for determining the gain or loss from the sale in question is the difference between the cost of the property and the price for which the property was subsequently sold. That section expressly so provides: “Sec. 204. (a) The basis for determining the gain or loss from the sale or other disposition of property acquired after February 28, 1913, shall be the cost of such property; except that * *…