Clover

This is a proceeding to review a decision of the United States Tax Court sustaining the assessment of a deficiency in petitioner’s income tax for the year 1935. The question for consideration is whether a sum of money received by the taxpayer in that year was capital gain or whether it was ordinary income. The Court held it to be the latter.

*571 The record does not contain the evidence. The facts as found by the Tax Court are these: In 1918 the taxpayer acquired 480 acres of land in Mono Basin having littoral rights on Mono Lake and riparian rights on Rush Creek. At the time of the acquisition of the land the value of the littoral rights was nil. Prior to 1930 the City of Los Angeles undertook an extensive project for the acquisition and use of the waters of Mono Basin. In some instances water rights were acquired by purchase, in others by condemnation. The city made a contract in 1933 with Nev-Cal Securities Company for the purchase of the land and water rights of the latter in Mono Basin, it being provided in the contract that $2,230,000 of the purchase price was to be held in escrow until the determination of awards for condemned properties. Such awards to the extent of…