This appeal is from a determination by the Commissioner of additional income and profits-tax liability of the taxpayer for the calendar year 1918 in the amount of $2,469.68. The only issue involved is whether the taxpayer was a personal service corporation during the year in question. From the oral and documentary evidence, and the allegations of the petition admitted by the Commissioner, the Board makes the following
FINDINGS OF FACT.
1. The taxpayer is a Louisiana corporation with its principal office in New Orleans, where it conducts an insurance agency. During *178tbe year in question its issued capital stock was $10,000, issued for cash and tangible property, of -which Harry S. Kaufman owned 54 per cent, Otto J. Mayer 23 per cent, and Joseph Levy 23 per cent. For services rendered to the taxpayer during the year 1918, Harry S. Kaufman, vice president and general manager, was paid $10,800; Otto J. Mayer, president-treasurer, $2,672; Joseph Levy, nothing.
2. During the year 1919 the taxpayer wrote various kinds of insurance policies for clients in New Orleans, for which it received commissions as compensation that amounted, approximately, to 75 per cent of its gross income of about $297,000. During the same year it was a general agent for the State of Louisiana for 12 insurance companies, which were represented outside of New Orleans by 40 or 50 subagents. About 25 per cent of its gross income was derived from its general agency department.
3. In addition to its general manager and secretary, the taxpayer, during the year 1918, regularly employed approximately 15 persons who were paid substantial salaries. Certain of such employees, under the supervision of the vice president, managed the subagents and some of the departments of the New Orleans office and solicited insurance. Solicitors, other than the officers of the taxpayer, secured new business during the year 1918 in the amount of $25,297.14. During the same year there was a large income from renewal of expiring policies. In addition to the salaries of the principal stockholders and of commissions paid solicitors the pay rolls of the taxpayer-amounted to $14,860.36 during the year 1918. ■
4. Harry S. Kaufman, who owned 54 per cent of the issued capital stock during 1918, devoted all his time to the conduct of the taxpayer’s business. Otto J. Mayer, who owned 23 per cent of the issued capital stock and was made president of the corporation because of his influence and high standing among property owners of New Orleans, rendered only occasional services to the taxpayer, for which he received a nominal salary. Mayer was interested in several other business enterprises, to which he devoted much of his time and from which he received substantial salaries in excess of $15,000 annually. The taxpayer’s business, attributable to Mayer, was from relatives or property owners with whom he had influence and was not personally solicited. Joseph Levy, who owned 23 per cent of the issued capital stock, devoted none of his time to the taxpayer’s business.
5. The taxpayer used its own capital, borrowed money from banks, and used its credit to pay return premiums on canceled policies, to advance premiums for its customers, to pay adjusted losses for insurance companies for which it was the agent, and to meet its pay rolls and other operating expenses.
*1796. The balance sheets of the taxpayer as at the opening and close of the year involved in this appeal were as follows:
Assets Dee. 81, 1917 Dee. 31, 1918
Notes receivable_$2, 050. 00 $750. 00
Accounts i>ayable_ 38,170.13 53, 852. 86
Cash_12,216. 40 8, 828. 77
Liberty bonds_ 1, 350. 00 5, 487. 50
Stock_ 9, 005. 00 9, 005. 00
Office furniture and fixtures_ 2, 000. 00 2, 000. 00
Total_ 71, 263.97 90,125. 25
Liabilities
Notes payable- T, 500. 00 10, 600. 00
Accounts payable_ 38,179. 43 53, 852. 86
Reserve for taxes and return commissions- 1, 484. 54 2, 700. 00
Otto J. Mayer_ 4,100. 00
Dividend payable_ 4, 000. 00
Capital stock- 10, 000. 00 10, 000. 00
Undivided profits_ 6, 000. 00 13, 004.25
Total 71, 263. 97 90,125.25
DECISION.
The determination of the Commissioner is approved.