tive and the income to be received not capable of sufficiently accurate estimation to permit the computation of a reasonable amortization allowance. Not only does the record lack real support for this assertion, but, to the contrary, the record is replete with evidence that petitioners were virtually certain to recover their bases in the contracts. We need only list these facts:

(1) Petitioners valued the contracts as of the date of liquidation on the basis of an estimate of future income and paid a tax based thereon. Having ascertained a fair market value for this purpose, it is too late to argue that such predictions are impossible or unreliable. See Waring v. Commissioner, 412 F.2d 800, 801 (3d Cir. 1969).

(2) Joseph A. Fischer, financial vice president and treasurer of Columbia, testified that estimates of future income from films are often compiled by the distributor, made a part of its records, and relied upon for general business planning purposes and for distribution decisions with respect to specific films.

Petitioners also suggest that the income forecast method results in distortions of income. However, that method allocates the basis to the years the asset earns income and results in a substantially accurate apportionment of the amortization of petitioners' basis. If the estimates prove to be inaccurate, adjustments can be made, thus correcting any possible distortions of income.

Petitioners also argue that, while they were required to value the contracts on liquidation according to the best data available in order to pay a tax thereon, that value, based on future earnings, may not necessarily be an accurate estimate for amortization purposes. Therefore, the argument goes, valuation for amortization purposes should not be required. It cannot be gainsaid that valuation for liquidation purposes was required. However, estimation is no less necessary under the tax law for amortization purposes. "[P]rediction is the very essence of depreciation accounting," Massey Motors, Inc. v. United States, 364 U.S. at 105, and the difficulty of prediction does not render it unnecessary. Inter-City Television Film Corp., 43 T.C. 270, 292 (1964).

To reflect the foregoing,

Decisions will be entered under Rule 155.

IDA MEREDITH, PETITIONER V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket Nos. 6897-73, 6898-73.

Filed October 14, 1975.

Petitioner abandoned resort property as a secondary residence
and immediately offered it for sale and/or rent. She retained the
property for approximately 21 years receiving no rental income
therefrom. Held, by the time of the years in issue petitioner could
not have had a reasonable expectation of receiving any rental
income and she never held the property for appreciation in value;
hence, the property was not "property held for the production of
income" within the meaning of secs. 167 and 212, I.R.C. 1954.
Held, further, respondent's determination that petitioner failed to
include a dividend in gross income upheld.

Peter S. Buchanan, for the petitioner.
Thomas F. Kelly, for the respondent.

STERRETT, Judge: The respondent determined the following deficiencies in the petitioner's Federal income taxes:

The issues in controversy are: (1) Whether certain property owned by petitioner was held for the production of income thereby permitting deduction of maintenance expense and depreciation thereon and (2) whether petitioner received a dividend in 1969 which she failed to include in gross income for that year.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found. The stipulation of facts, together with the exhibits attached thereto, are incorporated herein by this reference.

Petitioner Ida Meredith resided in Oakland, Calif., at the time she filed her petition herein. Petitioner filed timely Federal income tax returns with the Internal Revenue Service for the calendar years 1969, 1970, and 1971.

In 1949 petitioner and her then husband acquired land in Pebble Beach, Calif., a sometime resort area located approximately 125 miles from their Oakland residence. Shortly

thereafter they constructed a house on the property at a cost of $32,000. The Pebble Beach house was not their principal residence.

Petitioner's husband died in 1951 and petitioner became the sole owner of the Pebble Beach property, its furnishings, and its fixtures. At about the same time petitioner underwent surgery resulting in a pronounced alteration of her lifestyle. These events disposed her to sell the Pebble Beach property.

From 1951 through 1972, several real estate brokers in the vicinity of Pebble Beach were intermittently given listings at one time or another by petitioner to sell, or in some cases to rent, the property. The property was so listed during most of this period. Petitioner relied exclusively on these brokers to find a lessee or purchaser, and in 1972 the Pebble Beach property was sold for $90,000.

The agent handling the sale was Ruth A. Winslow (hereinafter Winslow), who from 1946 through 1972 was employed by Del Monte Properties Co. (hereinafter the company) or Del Monte Realty Co., a subsidiary of the company until 1972. In 1951 petitioner contacted Winslow concerning the sale of the Pebble Beach property and assented to the asking price she suggested. The Pebble Beach property was then listed for sale with the company and remained so listed for most of the period 1951 through 1972.

Beginning in either 1969 or 1970, the company required that a property owner sign a formal agreement setting forth its right to sell a listing. Such an agreement, which contained an "exclusive right to sell" provision, generally remained in effect from 1 to 6 months. The company had an exclusive listing on the Pebble Beach property at various times from 1969 to 1971. During these years, when the company did not have such a listing, the Pebble Beach property was listed for sale and/or lease with other real estate brokers in the Pebble Beach area.

Prior to 1969 or 1970 a property owner desiring to sell his property would supply the company with the pertinent information which was utilized in the preparation of a property listing form. These forms were used by the company's salesmen and were in the nature of informal agreements, remaining in effect until notice of cancellation was given by the property owner. The property listing forms relative to the Pebble Beach property contained the following information:

(a) The form dated December 15, 1951, states that the Pebble Beach house was occupied by the owner at times; that the key was with Winslow; that the selling price including furnishings was $55,000; and that the house was well furnished. The form contains no rental information. However, it was not the company's practice to put rental information on these forms.

(b) The form dated August 11, 1965, states that the Pebble Beach house was occupied by the owner at times; that Winslow no longer possessed a key thereto; that the selling price was $65,000 unfurnished or $75,000 furnished; that the rental price was $400 per month; that the Pebble Beach house was well furnished; and that it was taken off the market on September 6, 1966.

(c) The form dated December 10, 1969, states that the Pebble Beach house was occupied by the owner at intervals and that the selling price was $85,000.

(d) The form dated August 18, 1972, states that the Pebble Beach house was occupied on weekends; that it could be seen only on weekends through petitioner's son, Gorham Knowles (hereinafter Knowles); and that the selling price was $95,000.1 The information contained in the aforenoted forms was supplied by either petitioner or Knowles.

The Pebble Beach property was also intermittently listed for rent with the company during the years 1951 through 1972. However, the rental market in Pebble Beach was limited, and the company did not pursue an active rental business. It did not advertise rentals in newspapers and, in accordance with its policy of discouraging signs, placed no "for rent" or "for sale" signs on the Pebble Beach property. Had petitioner requested such signs the company would have complied but petitioner never tendered such a request nor did she make advertising efforts on her own behalf.

Petitioner planned to rent the Pebble Beach house furnished but upon selling the house in 1972, decided to retain the furniture. She then disposed of the furnishings as follows: a portion thereof was given to charity; another portion was given to petitioner's goddaughter; and the remainder was given to Knowles and is presently kept in his San Francisco and Pebble Beach homes. The latter, which he purchased in 1972, is adjacent

1 This listing form is that of the Del Monte Realty Co. which apparently was no longer a division of the company at that time.

to the Pebble Beach property at issue. He currently visits there approximately twice per month.

The furnishings in the Pebble Beach house included antiques and ashtrays which, along with approximately 10 to 12 bottles of liquor, were stolen in January 1971. This was one of six occasions on which the Pebble Beach house had been burglarized. These burglaries motivated Knowles to repossess the house keys from the real estate agents and to install a burglar alarm. Consequently, after either 1968 or 1969 no real estate agent possessed a key to the Pebble Beach house.

Until the actual sale of the Pebble Beach property, petitioner received no offers to either sell or rent the property. Winslow advised Knowles that no such offers had been forthcoming because the Pebble Beach house had electric heat, contained only two baths for three bedrooms, had no bathtubs, and lacked an individual dining room. Petitioner took no action to remedy these deficiencies. However, any corrective action would have entailed considerable expense.

During the years in issue Knowles generally handled petitioner's affairs, including transactions concerning the Pebble Beach property. During these years he accompanied petitioner from Oakland to Pebble Beach three or four times annually since she suffered from cancer and was unable to negotiate the trip alone. On these occasions petitioner would insure that the garden was properly kept and Knowles would inform the real estate brokers that the Pebble Beach house was open. Knowles also traveled alone to Pebble Beach approximately once per month when requested by an agent to open the Pebble Beach house and made occasional weekend trips to visit friends living in Pebble Beach. During these weekends he stayed at his friends' home but would open the Pebble Beach house and inform the real estate agents that he had done so. Generally, these trips brought Knowles to Pebble Beach approximately twice per month during the years 1969, 1970, and 1971.

During the years in issue the utilities on the Pebble Beach property, to wit the electricity, telephone, and water, were operative. The Pebble Beach house contained two telephones, and both petitioner and Knowles were listed in the Pebble Beach directory.