majority">

*180OPINION.

SteRnhagen:

The petitioner urges first that the $100,000 which he received under the option contract of December 31, 1925, was actually received by him not in 1926 as the respondent now argues, but in 1925, when he took possession of the four certificates of deposit and placed them in his safe deposit box. Failing this argument, the petitioner argues in the alternative that, if the $100,000 is held to have been received by him in 1926, it is nevertheless not within his gross income because it was part of the sale price of the Arizona claims which had cost him $109,000, thus representing no present profit. The respondent, in addition to his argument on the merits that the $100,000 was received in 1926 as the consideration for an option and not as sale price, argues further that the petitioner is estopped to urge that the amount was income in 1925; but in view of our disposition of the merits in respondent’s favor, there is no occasion for considering this argument of estoppel.

Despite the petitioner’s lengthy argument, the facts seem to us to lead very simply to the conclusion that the $100,000 was income received by him for the first time in 1926 as the consideration for an option. The contract by its terms provides unambiguously for an option and there is no room for its construction as a present sale.1

The care with which the corporation, acting by petitioner as its president, refrained in 1925 from making an outright payment to him and from endorsing the certificates of deposit, as their terms required, as a condition to receiving the cash, precludes the idea that such nonpayment was either inadvertent or without significance. If it was intended that Hull should be paid in 1925, such payment *181would have been easy to make without the use of certificates of deposit. The deliberate omission to make a simple payment can hardly be construed as evidence of an intention to make payment or as an actual payment.

Any doubt, however, as to the significance of the conduct of the corporation and the petitioner in 1925 is completely removed by the fact that the certificates of deposit were returned by petitioner to the corporation in 1926 and a corporation check to his order issued. Certainly if the corporation had regarded the certificates of deposit as his in 1925 and the payment of $100,000 thereby completed, there would have been no occasion for the payment in 1926.

In our opinion, the petitioner did not receive the $100,000 in 1925. It was received by him in 1926 as consideration for an option and not as sale price of a capital asset. It was within his ordinary income of 1926.

Reviewed by the Board.

Judgment will be entered under Rule 50.

See Rialto Milling Corporation, 25 B. T. A. 980, 985, where it is said:

“ * * * The option agreement is not in evidence, hut Hull, president of the petitioner and owner of the claims, testified that he gave the petitioner an option to purchase at any time before November 15, 1927, and received therefor $100,000 in cash, with the understanding that the petitioner would pay him an additional amount of $200,000 as and/ when it exercised the option.”

Citation profile

Relationships

How this case has been treated — in progress