The opinion
MRS. W. A. MITCHELL, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
Mitchell v. Commissioner
Docket No. 3177.
United States Board of Tax Appeals
13 B.T.A. 10 ; 1928 BTA LEXIS 3331 ;
July 23, 1928 , Promulgated
*3331 Evidence held insufficient to overcome respondent's determination of a deficiency.
J. M. McMillen, Esq., for the petitioner.
Benjamin H. Saunders, Esq., for the respondent.
GREEN
*10 In this proceeding the petitioner seeks a redetermination of her income-tax liability for the year 1919, for which the respondent, as set forth in his deficiency letter dated February 7, 1925, determined a deficiency of $1,831.31. The petitioner alleges that the respondent erred in holding that the sale by her of certain interests in the oil, gas and other minerals in, on or under certain real estate for $16,000 cash to W. C. Barnes in the year 1919, resulted in income to her of $16,000. The respondent contends that the property which the petitioner sold was inherited from her mother in 1916, at a time when it apparently had no value as an oil and gas property, and that, therefore, the entire proceeds from the sale in 1919 constituted taxable gain.
FINDINGS OF FACT.
The petitioner is an individual and resides at Winters, Tex., Mrs. W. A. Mitchell and Fannie Mitchell are the same person. She is the daughter of E. Y. Jennings and Mrs. Modena Jennings, who *3332 died in 1916 leaving a will which bequeathed all her personal property to her husband, E. Y. Jennings, and which contained the following provisions regarding the disposition of her real estate:
Third, I give to my beloved husband E. Y. Jennings during his natural life, and so long as he may live, all of my real estate and he is hereby given power to sell and dispose of the same, as he may see proper and after his death, the said real estate shall pass to our beloved children, or their descendants, share and share alike, as they would inherit, under the law of descent, and distribution as provided for under the laws of the State of Texas, and in the event the said real estate should be sold, by my beloved husband, during his life, then the proceeds arising therefrom shall descend and pass as the said real estate, as above mentioned.
Some of the children of Modena Jennings and E. Y. Jennings, among them the petitioner, contested the probate of the will of Modena Jennings and were successful in the County and District Courts at Breckenridge, Tex. E. Y. Jennings took an appeal to the Court of Civil Appeals at El Paso, Tex., where a decision was rendered on May 15, 1919, reversing *3333 the judgments of the County and District Courts and remanding the case for a new trial.
*11 Four of the children, who had not contested the will of their mother, Modena Jennings, were given property by their father, E. Y. Jennings, prior to the decision of the higher court. After the decision was rendered the petitioner, her husband, and her sister, Mrs. Lacy, went to see E. Y. Jennings for the purpose of urging the latter to give them the equivalent of what he had given the other children who had not contested the will. After two or three hours of pleading, he told them he would quitclaim to them certain property but that they must sign an agreement not to give him any more trouble about the will which was agreed to by the petitioner, Mrs. Lacy, and Mr. Mitchell. A few days later, on June 28, 1919, the petitioner and her husband signed a release (the exact nature of which is not disclosed) and agreed not to further contest the will, and E. Y. Jennings thereupon quitclaimed certain interests in oil and gas royalties to the petitioner and her husband, which interests the petitioner and her husband sold on the same day to W. C. Barnes for $16,000. The quitclaim deed from *3334 Jennings to the petitioner and her husband recited a consideration of $1.
OPINION.
GREEN: This proceeding must be decided adversely to the petitioner on the ground that she has failed in her proof. The error alleged in the amended petition was that:
The Commissioner erred in holding that the sale by taxpayer of certain interests in the oil, gas and other minerals in, on or under certain Real estate for $16,000.00 cash to W. C. Barnes in the year 1919, resulted in income to taxpayer of $16,000.00.
The petitioner further alleged in the same petition that:
The Commissioner considered the $16,000.00 as income on the theory that the property sold had been inherited by taxpayer from her mother and the $16,000.00 represented the increase from the date inherited to the date sold.
It is the petitioner's contention that the property which she sold was acquired as a gift from her father on the day she sold it and that she, therefore, realized neither profit nor loss on the sale. But the record is so void of essential facts that we are unable to determine whether or not there is merit to the petitioner's contention. For instance, all that we can find as a fact, other than the *3335 respondent's determination that the petitioner inherited the property in question from her mother in 1916, is that after she had pleaded with her father for several hours to give her what he had given some of the other children who had not contested the will, he quitclaimed to her and her husband the property in question, which was sold on the same day to Barnes for $16,000. But who owned the property prior *12 to Modena Jennings' death? Was it the separate property of E. Y. Jennings? Was it the separate property of Modena Jennings? Or was it community property? The respondent in his answer admits that E. Y. Jennings quitclaimed to the petitioner and her husband "certain royalty interests in oil, gas and minerals on, in or under certain real estate formerly belonging to Mrs. E. Y. Jennings." The original petition alleged that the "royalty interests" were "on, in or under certain real estate which Mr. and Mrs. E. Y. Jennings owned prior to the death of Mrs. E. Y. Jennings." The amended petition does not allege who was the owner of the property prior to Modena Jennings' decease, but in the brief counsel for petitioner argues as follows:
Certainly there is no evidence *3336 in the record that this taxpayer inherited any interest whatever in the property deeded to her. Neither is there any evidence that the property transferred to her was ever property owned by Mrs. Jennings prior to her death. The record merely shows that E. Y. Jennings deeded certain royalty interests to his daughter (Mrs. Mitchell) and her husband. There is nothing whatever to show that Mrs. Jennings had an interest in the property at any time or to show that the title to this property was not in E. Y. Jennings, the maker of the deed. As a presumption of law, the party making a transfer is presumed to own the property he transfers. If this presumption is not rebutted it stands as a fact. Where in the record is there any testimony to show that this property transferred to Mr. and Mrs. Mitchell did not belong to E. Y. Jennings? * * *
The answer to the last question in the above quotation is that the respondent determined the deficiency on the finding that the petitioner inherited the property sold from her mother, and that the presumption of correctness of that determination has not been overcome.
We, furthermore, do not know whether the mother's will was ever probated. It *3337 is alleged in the petition that the will "was duly probated," but that allegation was denied in the respondent's answer and no proof of probate was offered. The nature of the release which the petitioner and her husband signed and delivered to petitioner's father was not disclosed. Lastly, the record does not show when the leases creating the royalty interests in question were made or by whom made. The evidence, in our opinion, is wholly insufficient to enable us to pass upon the legal effect that such facts might cause. The burden is upon the petitioner to prove by competent evidence that the respondent erred in his determination of the deficiency. . This we believe she has failed to do, and, accordingly, judgment must be for the respondent.
In passing we desire merely to mention the , who was also a daughter of Modena Jennings and a sister to the petitioner here. While that case has not been used *13 as an authority for the instant decision, the facts there are more complete and on those facts the respondent's determination was sustained. *3338
Reviewed by the Board.
Judgment will be entered for the respondent.