The opinion
MADDEN, Judge
(dissenting in part).
I am unable to agree with the decision of the Court as it relates to the Crescent transaction. Our Finding No. 4 summarizing the Crescent writing shows that what was granted by the plaintiff to Crescent was the normal right to cut timber, paying for it as and when it was cut, with certain míni-mums of annual cutting stipulated, unless stated conditions should occur making cutting uneconomical. The transaction, properly analyzed, left in the plaintiff “an economic interest” within the language of Section 117(k) (2) of the most important kind possible. It left him with the ownership. It gave Crescent a profit a prendre, a right to become the owner upon reduction to possession by cutting. The other features of the writing relating to land taxes, risks of fire, etc., were agreed contractual arrangements shifting burdens or risks, but not, of course, making Crescent the owner of trees standing on Boeing’s land. Hence I think Section 117(k) (2) is applicable.
The opinion of the Court, though indicating that the section is not applicable, concludes that its applicability would not affect the decision; that even if the plaintiff retained an economic interest in his transaction with Crescent, nevertheless 1928, the date of that transaction, was the date when the plaintiff parted with the timber which he had acquired in 1923 and 1925, and that, therefore, he had not held the asset for ten years and was not entitled to the lower tax rate applicable to a holding period of ten years or more.
This is a difficult question which has not been adequately presented to us in briefs and arguments. But it seems to me that the 1928 arrangement with Crescent did not terminate the plaintiff’s “holding” of the timber, within the meaning of the tax statutes. He still “held” the timber, in the sense of owning it, though his holding was subject to the right of Crescent to cut it and pay for it unless, in turn, certain conditions arose, in which event there was no duty to currently cut or pay. If the plaintiff ceased to “hold” the timber in 1928, presumably he then had a capital gains tax to pay, wholly or in part. But no tax could possibly have been computed because it could not be known until at least some of the timber was cut and it was determined what species it was, and what the market was, whether the plaintiff had a gain over the properly allocated cost of that timber. It seems to me that if the tax statutes, taken as a whole, are to hang together, they should not regard one as having made a taxable sale in 1928 when neither the Government nor the taxpayer could possibly assess or pay any tax at that time, and could not assess or pay the tax on the timber here in question until the years 1936 and 1937, when the timber here in question was cut and paid for. Then, for the first time, was it possible to know what gain, if any, the plaintiff had made on this part of the timber. The statutory provision for apportioning the tax to particular years in which payments come in, as if it were an installment sale, is not applicable, since the selling price, and consequently the gain, are not ascertainable until the particular piece of timber has been cut and paid for.
I think the plaintiff should recover the full amount claimed on the Crescent as well as on the Greenwood branch of his claim.
HOWELL, Judge, concurs in the foregoing dissent.