The opinion
Murdock,
concurring: This case is correctly decided for the respondent because of a failure of proof on the part of the petitioner. However, the statements, that there would have been no income had the money been no more than was necessary to replace the portions of the building removed and had it been expended for that purpose, are fundamentally wrong and should be disregarded as dicta. The realization and computation of gain under the Federal income tax statutes never are affected by the use to which the taxpayer puts his money after he receives it. Standard Slag Co., 20 B. T. A. 503; Mary M. Shea, 31 B. T. A. No. 513. His gain, may go unrecognized under certain circumstances, but that is because of some special provision of the statute. Cf. section 112 (f) of the Bevenue Act of 1928. Such special provisions deal with recognition, not with realization or computation of gain, and their very presence in the statutes indicates that in all other cases all of the gain shall be recognized regardless of what use is made of the money received. There is no suggestion that any special provision applies in this case.
Money was paid to a lessor by a lessee in lieu of replacing substantial parts of a building which the lessee had removed and had agreed to replace. The question is, How much of the money settlement is income to the lessor ? The answer to that question does not depend upon what the lessor did with the money nor upon how much money would have been necessary to restore the building. If all or some part of the money might be considered rent that would be all income. If all or any part of the money was not rent but a payment to the lessor for portions of his building, then to that extent the transaction was substantially similar to a sale and must be treated for income tax purposes as a “ sale or other disposition ” of a portion of his building. Sec. 111. In such case he is entitled to have returned to him tax-free the original cost of the portion of the building removed but no more. If the amount of money paid for the portion of the building removed is in excess of the basis for gain or loss which the property removed *828 had in the hands of the owner, adjusted for depreciation and obsolescence, gain is realized. If the amount received were less than the adjusted basis, loss would be sustained. If the lessee had completely removed the building and, rather than replace it, had settled in cash, clearly the excess of the cash over the basis of the building for gain or loss to the lessor would have been income to the lessor. The principle is the same where only part of the building is removed and paid for in cash. Even if the difficulty of determining the portion of the basis against which to apply the cash were insurmountable, it would hardly change this fundamental method of determining income under the statute. Cf. Burnet v. Houston, 283 U. S. 223 . But there are-practical ways of determining the portion of the basis applicable to the portion of the building removed. Cf. Harry Johnston Grant, 30 B. T. A. 1028. When and if the taxpayer expends any of the money for making replacements, those expenditures will be capital expenditures which will increase the basis for subsequent depreciation and gain or loss. The Commissioner determined that gain was realized. His determination must be approved in the absence of proof that the excess of the amount received over the adjusted basis for the property which had been removed was less than the amount of gain determined. There was no proof of the basis, and, therefore, approval of the determination of the Commissioner is proper.
Black, Smith, Sternhagen, MoRRis, Matthews, Goodeioh, and Leech agree with the above.