Farmers' Fuel Co. v. Commissioner

*1061OPINION.

Korner, Chairman:

This Board, in the Appeal of Isse Koch & Co., Inc., 1 B. T. A. 624, said:

The object sought to be accomplished by Congress, in enacting section 240 of the Revenue Act of 1918, was to tax as a business unit what really was a business unit. * * * Wé believe that a proper construction of the statute, if it is to serve the purpose for which it was intended, requires us to hold that the “ control ” mentioned therein means actual control, regardless of whether or not it is based upon legally enforceable means. The control, however, must be shown to be a genuine and real control actually exercised * * *.

The record in this appeal convinces us that the two corporations involved herein constituted a business unit. The Switch Company had no patrons other than the taxpayer and depended entirely on the latter for its revenues. In a very real sense it was operated by the taxpayer as a plant facility. The record makes it clear that the control of the stock of both corporations by Lukins was genuine and real and was actually exercised by him. The minority stockholders in the Switch Company had ceased to exist as such, except in a most nominal sense. We are of opinion that the facts in this appeal bring it pat within the above-quoted rule of this Board in Koch's Appeal. The corporations are entitled to be affiliated.