248  FEDERAL   INCOME   TAX

tain  as  nearly  as  possible  the  true  value  of  the  property
at  the  time  it  was  taken  over,  and  any  excess  over
this  ascertained  value  is  income.  Similarly,  it  has  been
ruled  that  where  corporations  have  acquired  for  a  mere
nominal  sum,  property  which  at  the  time  of  its  acquire-
ment had  a  value  greatly  in  excess  of  such  sum,  a
careful  estimate  of  the  value  of  the  property  at  the
time  it  was  acquired  may  be  fixed  and  set  up  as
the  value  representing  the  cost  of  the  property,  and
any  excess  over  such  fixed  value,  at  which  such  prop-
erty may  thereafter  be  disposed  of,  will  be  treated  as
income.  The  value  of  property  so  fixed  is  subject  to
the  approval  of  the  Internal  Revenue  Bureau.^®

Rule  as  to  Farmers.  The  cost  of  stock  purchased
for  resale  may  be  deducted  by  a  farmer  under  the  item
of  expense  in  the  year  in  which  the  stock  is  purchased.^*
This,  however,  is  not  an  absolut^  requirement,  since
a  farmer  may  purchase  stock  to  such  an  extent  that
the  cost  would  more  than  offset  his  income  for  the
year.  He  may  therefore  treat  the  amount  paid  for
stock  in  the  same  manner  as  the  cost  of  any  other
property,  that  is,  make  no  deduction  at  the  time  of
purchase,  but  deduct  such  cost  from  the  selling  price
at  the  time  of  sale  and  report  only  the  remainder  as
profit.  Money  expended  for  stock  for  breeding  pur-
poses is  regarded  as  capital  invested  and  such  sums
may  not  be  deducted  as  expense  in  the  year  in  which
the  stock  is  purchased.  The  amount  so  paid  for  stock
for  breeding  purposes  may  be  taken  into  consideration
under  the  head  of  depreciation,  that  is,  the  total  sum
paid  may  be  divided  by  the  number  of  years  in  which

10  T.  D.  2161.
