Much testimony was introduced on the subject of March 1, 1913, value, and there was a wide difference of opinion between the witnesses. One witness for respondent who was widely experienced in the valuation of utilities, testified that the March 1, 1913, value of the property was $206,000 and a witness for petitioner, who appeared equally as widely experienced, placed the valuation as high as $652,150. This witness based his valuation on $200,000 for the tangibles and $452,150 for the intangibles connected with the hydroelectric plant. We do not think there would be any profit in discussing the details of this evidence.

The fair market value of assets at any given date is a question of fact to be decided upon all the evidence admitted and no set rules, methods or formulas are controlling. Huron Building Co., 15 B. T. A. 1107; affd., 53 Fed. (2d) 575; certiorari denied, 53 Fed. (2d) 575; 287 U.S. 632; Keystone Steel & Wire Co., 16 B. T. A. 617; affd., 62 Fed. (2d) 458. From all the evidence we have found that the March 1, 1913, value of the entire hydroelectric plant, including tangibles and intangibles, was $375,000. This should be the basis used in computing petitioner's gain or loss, if any, on the sale in 1923. This basis should of course be adjusted down to the date of sale by giving effect to additions made to the plant from March 1, 1913, and also by giving effect to depreciation which had accumulated against the depreciable assets since March 1, 1913. As to additions made to the plant since March 1, 1913, and the rate of depreciation on the depreciable assets, there seems to be no controversy between the parties and hence we have made no findings of fact on those items.

Petitioner's third contention is that even though the Board should hold that the sale was made in 1923 and that there was a taxable profit therefrom, nevertheless such profit should be taxed on the installment basis. It is petitioner's position that the sale price was received in two years, viz., $45,000 in 1922 and $405,000 in 1923, and that since the $45,000 initial payment is less than 25 per cent of the contract price, only 90 per cent of the profit can be taxed in 1923, as 10 per cent (45/450) is attributable to 1922, under sections 1208 and 212 (d) of the Revenue Act of 1926. In Warren National Bank, 22 B. T. A. 759; affd., 61 Fed. (2d) 325, the Board decided adversely a contention similar to that now made by petitioner. Following that decision we hold against petitioner on this issue.

Petitioner's fourth and last contention is that it not only does not owe any deficiency, but that on the contrary it has made an overpayment of its taxes for 1923 because it failed to deduct $41,230.79 which it should have accrued upon its books as an interest liability on December 31, 1923, but which it did not accrue because of error on its part. We find no basis for this contention.

When petitioner agreed to purchase from the Manitowoc Portland Cement Company $1,500,000 of its bonds at a purchase price of $1,320,000, it was embodied in the agreement that all the purchase price should not be paid at once but that petitioner should advance it in installments as the work progressed on the Manitowoc Company plant. But inasmuch as the bonds of the Manitowoc Company which were delivered to petitioner drew interest from the date of said bonds, June 2, 1923, it was agreed that the Newaygo Company would enter on its books, whenever it made payment of an installment, a credit to the Manitowoc Company representing the amount of interest at 7 per cent per annum on the amount of each installment paid by the Newaygo Company reckoned from June 2, 1923, to the date of such payment, and that the total amount of interest credits so entered should be paid by the Newaygo Company to the Manitowoc Company, when the new cement manufacturing plant of the latter company should have been fully erected and completed. Under the terms of this contract petitioner paid the Manitowoc Company two installments in 1923, upon which interest of $10,206.43 was calculated and credited to the Manitowoc Company on petitioner's books, December 31, 1923. This amount was not paid until October 15, 1924, but petitioner, keeping its books on an accrual system, was entitled to accrue this liability in 1923, as it did do, and respondent has so allowed.

But no other payments of installments were made by petitioner under the terms of the contract in 1923 and no liability to pay interest accrued against petitioner in 1923 other than the $10,206.43 which it accrued on its books and which the respondent has allowed as a deduction. Petitioner was not entitled to a larger accrual of interest in 1923 than that shown by its books. Interest liabilities of a taxpayer should be accrued when all events have occurred which fix time of accrual. Cf. Continental Tie & Lumber Co. v. United States, 286 U. S. 290.

Under the terms of petitioner's contract with Manitowoc Company it could not tell what interest it would owe Manitowoc Company in any given year until the installments for that year were determined and paid. Consequently until such installment payments were made all events had not occurred which would enable petitioner to fix the time of its accrual of interest liabilities to the Manitowoc Company. On this issue we hold for respondent.

Reviewed by the Board.

Decision will be entered under Rule 50.

LOVE, dissenting: I heard this case and observed the witnesses who testified, and am convinced that the evidence clearly shows that the

value of the "Riparian Land, Water-Power Rights & Power-House Site Land" was $300,000, instead of $100,000, as determined by the respondent; and that the basis used by the respondent of $183,526.57 for the "Power House, Dam & Electric Meters" should not be disturbed, as petitioner has not questioned the correctness of such determination and the evidence offered by the respondent does not prove that he erred in that respect.

PINCUS BRECHER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 52741. Promulgated April 6, 1933.

Leo Sobel, C. P. A., for the petitioner.

John E. Marshall, Esq., for the respondent.

OPINION.

VAN FOSSAN: The respondent determined the following deficiencies and penalties due from petitioner:

Petitioner makes only one allegation, phrased as follows: The Commissioner of Internal Revenue has completely disregarded actual disbursements which represent contra charges to the deposits in question arising from the repayment of loans and exchanges deposited as follows:

1926
1927.

1928_

$44,366. 10

41. 776. 50 279.949. 12

The respondent computed the alleged income of petitioner by reference to large unexplained bank accounts. Petitioner contends generally that substantially all of the entries were explainable as loans and repayments.

The record in the case is confusing and contradictory throughout, and in some respects unintelligible. It is filled with statements about loans, repayments, exchanges, double exchanges, deposits and redeposits, without adequate explanations or definitions. At the hearing petitioner's counsel was specifically advised that petitioner must relate the various checks introduced and items inquired about

to the items on the bank statements. Disregarding this admonition, counsel failed entirely to establish the relationship between deposits and alleged repayments. In response to inquiry as to specific items petitioner's frequent reply was, "I don't remember." To other questions petitioner replied in qualified terms, seldom directly or unequivocally.

Moreover, it was brought out that in an examination under oath before a referee in bankruptcy, when inquiry was made as to many of the same items here under scrutiny, the replies of petitioner were directly opposed to his present answers and, on question by the presiding Member, the petitioner admitted that he gave false testimony before the referee. The reason assigned for so doing was that the truth would have hurt his business.

It would serve no useful purpose to attempt a detailed narration of the evidence. The record establishes that petitioner had bank deposits showing hundreds, perhaps thousands, of entries, aggregating hundreds of thousands of dollars. Throughout the taxable years petitioner was continuously engaged in these financial transactions. It overtaxes credulity to believe that this was merely a pastime from which no profit was derived. Nevertheless, petitioner claims his sole income was a small salary from the firm with which he was connected. His allegation that the deposits were all loans, each being offset by a repayment, is not sustained by the proof. On the record before us petitioner has not proved that respondent's determination of income was incorrect. The testimony and all reasonable inferences there from tend to corroborate the finding. Therefore, we affirm the deficiencies.

As to the fraud penalties, the record shows that an oath means nothing to the petitioner; that he would give false testimony if he thought the truth would hurt his business. The maxim, "falsum in uno, falsum in omnibus," may be a harsh rule, but here it seems justified. In M. Rea Gano, 19 B. T. A. 518, we said:

To establish fraud by direct proof of intention is seldom possible. Usually it must be gleaned from the several transactions in question and the conduct of the taxpayer relative thereto.

We also said in that case: "A failure to report for taxation income undoubtedly received, such action being predicated on a patently lame or untenable excuse, would seem to permit of no difference of opinion. It evidences a fraudulent purpose." Here we are fully convinced that petitioner understated his income with intent to evade tax in the years in which he made returns. It follows that penalties for fraud were properly added to the deficiencies for the years 1926 and 1927.

The petitioner filed no return for 1928. The law (section 291, 1928 Act1) requires the Commissioner in such a case to add 25 per cent of the tax found due for such failure to file. This action is mandatory (Rogers Hornsby, 26 B. T. A. 591), and constitutes a separate liability from the fraud penalty under section 293 (b)2 of the same act. The respondent determined a penalty of 25 per cent for failure to file a return and a further penalty of 50 per cent for fraud. The record proves fraud. Therefore, both penalties were correctly determined. The action of the respondent is approved in all respects.

Reviewed by the Board.

Decision will be entered for the respondent.

THE CAXTON PRINTERS, LIMITED, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 62142. Promulgated April 6, 1933.

1. PENSION TRUST FUND-REQUIREMENTS FOR DEDUCTIBILITY OF PAYMENTS THERETO UNDER SECTION 23 (Q), REVENUE ACT OF 1928. Where petitioner's stockholders and directors in 1929 passed resolutions to create a pension fund to pension its employees and during the taxable year set up as a liability on its books a reserve of $8,000 labeled "Pension Reserve Fund," this book entry was not such a transfer or paying into a pension trust fund as is contemplated by section 23 (q), Revenue Act of 1928, to make such amounts deductible. Merrill Trust Co., 21 B. T. A. 1409, followed

2. INSURANCE RESERVE. Where the petitioner set up a reserve as a life insurance fund to protect its president, who was too old to take out life insurance at anything like a reasonable rate, instead of purchasing life insurance, said fund is not deductible in the taxable year as no liability was incurred nor payment made therefrom. Spring Canyon Coal Co., 13 B. T. A. 189, followed.

3. DEPRECIATION. Evidence examined and respondent's findings approved.

1 SEC. 291. FAILURE TO FILE RETURN.

In case of any failure to make and file a return required by this title, within the time prescribed by law or prescribed by the Commissioner in pursuance of law, 25 per centum of the tax shall be added to the tax, except that when a return is filed after such time and it is shown that the failure to file it was due to reasonable cause and not due to willful neglect no such addition shall be made to the tax. The amount so added to any tax shall be collected at the same time and in the same manner and as a part of the tax unless the tax has been paid before the discovery of the neglect, in which case the amount so added shall be collected in the same manner as the tax. The amount added to the tax under this section shall be in lieu of the 25 per centum addition to the tax provided in section 3176 of the Revised Statutes, as amended.

2 SEC. 293. ADDITIONS TO THE TAX IN CASE OF DEFICIENCY.

(b) FRAUD. If any part of any deficiency is due to fraud with intent to evade tax. then 50 per centum of the total amount of the deficiency (in addition to such deficiency) shall be so assessed, collected, and paid, in lieu of the 50 per centum addition to the tax provided in section 3176 of the Revised Statutes, as amended.