The opinion of the court was delivered by: LETTS
The evidence makes crystal clear that some of the property taken under the eminent domain proceedings was used by the taxpayers to produce income. This has ample support in the taxpayers' returns for several years preceding the tax year in question as well as for the year in question. Since the property was used by the taxpayers in a business, the Commissioner was authorized to determine that which is a return of capital and that which is a return of ordinary income. The fact that the condemnation award made no division as between capital and income is of no importance.
Since the taxpayers for a long period of time, as witnessed by their returns, used portions of the property in a trade or business or to produce income fully justified the Commissioner in holding that the property used in the production of income is depreciable in determining the gain derived upon its sale and that the amount of gain so derived is a return of ordinary income under § 113(b) (1)(B), of the Internal Revenue Code, 26 U.S.C.A. § 113(b)(1)(B), and that it is taxable as such.
The entire amount of the award represents income to the taxpayers in 1941 and was properly included in the taxpayers' 1941 personal income tax return. The judgment in favor of the taxpayers in the amount of $ 48,500.00 was entered in September 1941 and then became available to the taxpayers.
The taxpayers maintain that their second claim for refund is timely, in that it was an amendment to the first claim and did not present any new or alternative ground for recovery. An examination of the two claims is sufficient to refute that contention.
The taxpayers are not entitled to the relief asked. Accordingly their complaint will be dismissed.
Counsel for defendant will present for settlement findings of fact, conclusions of law and an appropriate judgment form.
I. The plaintiffs, husband and wife, during the period from 1919 to 1941, acquired at a cost of $ 4,770.00 approximately forty-seven and one-half (47 1/2 ) acres of land with old buildings thereon located adjacent to Fort Belvoir, Virginia.
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