The opinion
Trammell,
dissenting: It would seem reasonable to say that if the evidence clearly establishes that from a certain day the residential property was no longer property of that character, but was either rented or was on the market for rental and efforts were being made to rent it, it was rental property and therefore business property from the time it was sought to rent it. In Heiner v. Tindle, 276 U. S. 582 , there was no difference between the actual abandonment as a residential property and the rental thereof and it was not necessary for the court to draw a distinction in that case between the actual rental of the property and the abandonment as residential property and the undertaking to rent it. The court did say “ the loss here has resulted from the sale of property not used for residential purposes by the taxpayer and the transaction entered into for profit and resulting in the loss was not the purchase of the property but its appropriation to rental purposes.” It seems to me that property is just as effectively appropriated to rental purposes when it has been definitely abandoned as a residence and offered for rental purposes.
If the view should be taken that the abandonment of the property as residential -property and the placing it on the market as rental property was the conversion from residential to business property, then, in my opinion, the conclusion reached in the prevailing opinion would be correct. Since this transaction occurred previous to March 1,1913, the March 1,1913, value would be one of the factors to be determined. If the property was not abandoned or converted' into business property until subsequent to March 1, 1913, in my opinion, the March 1, 1913, value is not a factor in this case. In this connection the Supreme Court, in the case of Heiner v. Tindle, supra, said:
For the purpose of computing the loss resulting from this particular transaction, we think it must stand on the same footing as losses resulting from a similar use of property acquired by gift or devise and that whenever needful the fair market value of the property at the time of the transaction for profit was entered into may be taken as a basis for computing the loss.
In my opinion, it is needful to do this when the transaction occurred subsequent to March 1, 1913, and in such a case the value of the property on the date' of conversion into business property represents the cost or investment upon which the deductible loss is based. We *725 can not go back of the date of the transaction entered into for profit. We have simply a case where a transaction was entered into for profit in 1916 and that transaction resulted in a loss. Certainly if the property had been purchased in 1916 there would be no occasion to go back and determine any March 1, 1913, value, or if property had been acquired by gift or devise in 1916, there would be no occasion to determine a March 1, 1913, value and the court clearly states that, for the purposes of computing a loss when residential property has been converted into business property, the transaction would stand on the same footing as a loss resulting under similar use of property acquired by gift or devise. Since the transaction for profit was entered into in 1916, the only question to be determined is what was this fair market value on the date of conversion, what was the sale price received therefor in the taxable year, and how much depreciation should be deducted, giving effect, of course, to any additions or improvements made at the time of conversion or subsequently.
The case of Tindle v. Heiner, supra; United States v. Flannery, supra; McCaughn v. Ludington, supra, and other cases cited in the prevailing opinion were controlled by acts prior to the Revenue Act of 1924. The latter act made a decided change and allowed for the first time a loss based on March 1, 1913, value or cost, whichever was greater. Thereafter the deduction was no longer limited to the “ actual loss.”
For the foregoing reason, I am unable to concur in the conclusion reached in the prevailing opinion.
Mtjkdock agrees with this dissent.