dissenting: There is nothing new about the situation typified by this proceeding. In my opinion, petitioner and his wife under the circumstances which the evidence here discloses were not “carrying on business in partnership” (sec. 181, I. R. C.), and never intended to do so. Even before the decisions in Lusthaus v. Commissioner, 327 U. S. 293, and Commissioner v. Tower, 327 U. S. 280, the principles governing such situations had become adequately established. See, e. g., Lewis Hall Singletary, 5 T. C. 365; Clarence L. Fox, 5 T. C. 242; W. M. Mauldin, 5 T. C. 743.
Commissioner v. Tower, supra, is quoted in part in the present opinion to the effect that the intention of the parties “is a question of fact, to be determined from testimony disclosed by their agreement, considered as a whole, and by ‘their conduct in execution of its provisions.’ ” The present petitioner’s wife obtained a loan from her mother of $1,000. She received a half interest in a business treated by the parties as worth upwards of $10,000, and the firm’s accounts show her capital account to have been opened with a credit of $5,-458.47, the origin of which is unexplained. The earnings credited to her account were used to buy property in the joint names of petitioner and herself, to pay a premium on insurance on petitioner’s life, for payment of .the wife’s income tax, and gifts to the children. There is no evidence that any considerable sum was disposed of in a manner different from what it would have been had the husband continued to be in name, as he was in fact, the sole proprietor of the business.
The wife rendered services which could hardly have been of the managerial or “vital” nature described in Commissioner v. Tower, supra, and Lusthaus v. Commissioner, supra. Part of them are designated as “similar errands.” She was a housewife with two children, and a third was bom within a month of the execution of the “partnership agreement.” She had no household servants. The value of her contribution seems extravagantly measured by the salary which was actually set up on the books in her favor in the amount of $49.50 a week. Petitioner’s brother, who performed highly responsible services, was paid only $16,000, and even the reasonableness of that amount is denied in the present opinion; yet the wife’s share for one year is upwards of $20,000.
The partnership agreement, which is in the highest degree ambiguous and provides that petitioner and his wife “shall share all the profits,” without specifying the proportions, goes on to provide that “each shall be entitled to any and all net profits.” And to make clear the family nature of the transaction an arrangement based on sur-vivorship is included. During all of the year in issue the existence of the partnership was undisclosed. Petitioner’s certificate of doing business as a sole proprietorship was unchanged. Employer’s tax returns and even a chattel mortgage on the business property were signed only by petitioner as owner. It seems to me difficult in the extreme to find evidence in the record which warrants the conclusion that, as evidenced by the conduct of the enterprise, there was any actual or intended carrying on of this business in partnership.
As in W. M. Mauldin, supra, “the agreement to divide the profits according to the supposed shares in the capital of the enterprise,” coupled with the devotion o.f petitioner’s full time and effort to the business and! the necessarily negligible participation by the wife, “leads inevitably to the result that some — undisclosed—part of the earnings from [his] labor was being enjoyed by the wife — a contrivance which has long been viewed as inadmissible in dealing with the proper allocation of income tax burdens. Lucas v. Earl, 281 U. S. 111.”
Turner, Smith, Murdock, and Harron, JJ., agree with this dissent.