William Ray Smith - Page 7

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          tax purposes, the gold coins he received should be valued at                
          their legal tender face value amount of $50.  Respondent argues             
          that the gold coins received by petitioner have a fair market               
          value far in excess of their face value.  Thus, respondent                  
          contends that for purposes of determining the amount realized               
          from the sale pursuant to section 1001, the coins received must             
          be classified as "property" rather than "money".  For the reasons           
          discussed below, we agree with respondent.                                  
               Section 1001(b) provides that the amount realized from the             
          sale of property "shall be the sum of any money received plus the           
          fair market value of the property (other than money) received."             
          The first issue we must decide is whether the coins received by             
          petitioner from sale of timber to C&D are classified as "money"             
          or "property (other than money)" within the meaning of section              
          1001(b).  If the coins are money, then their face value                     
          determines petitioner's income from the sale of timber; however,            
          if the coins are property, then their fair market value is used.            
               Coins which are not currently circulating legal tender are             
          property to be valued at their fair market value for purposes of            
          section 1001(b).  California Fed. Life Ins. Co. v. Commissioner,            
          680 F.2d 85 (9th Cir. 1982), affg. 76 T.C. 107 (1981); see also             
          Lary v. Commissioner, T.C. Memo. 1987-169.  This result is                  
          unaffected by the fact that such coins may still be used as legal           


          6(...continued)                                                             
          lumber.                                                                     



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