*231OPINION.
Ivins:It is obvious that the two corporations constituted a single economic unit with an arbitrary assignment of profits to the phonograph company, which in fact employed no capital and was practically nothing but an order-soliciting department of the furniture company. But this alone is not necessarily sufficient to bring the *232corporations within the provisions of section 240 (b) of the Revenue Act of 1918, under which corporations are deemed affiliated:
(1) If one corporation owns directly or controls through closely affiliated interests or by a nominee or nominees substantially all the stock of the other or others, or (2) if substantially all the stock of two or more corporations is owned or controlled by the same interests.
The statute contains three elements which are not free from doubt. It is impossible to define exactly what is meant by controls; no general rule can be made that will fix the percentage necessary .to constitute substantially all the stock of a corporation; and the word interests is a term susceptible of several interpretations.
It would be dangerous to attempt to make a strict definition of any one of these doubtful terms to be applied in every case, for the same reasons that have caused the courts to avoid attempting to define due process of law. If a strict and generally applicable definition were practicable, it probably would have been furnished by Congress. The very use of elastic terms indicates an intent to have them construed flexibly in the light of the peculiar circumstances of each particular case.
We have held that control, in the statute, is not necessarily limited to strict legal control, such as might be enforced by ordinary legal process. Appeal of Isse Koch & Co., 1 B. T. A. 624. But circumstances which might indicate control in one case would not necessarily constitute it in another where other circumstances, involving other elements, were at variance.
“Substantially all” has been recognized by the Commissioner’s regulations (Reg. 45, art. 633) as an elastic term which “ can not be interpreted as meaning any particular percentage, but must be construed according to the facts of the particular case.” The Commissioner has held that 95 per cent will be regarded as prima facie but not conclusively constituting substantially all of the stock of a corporation. The extent of the stock necessary to constitute substantially all may well vary according to the degree of control exercised.
.Interest is a word for which the dictionaries give many definitions. In its objective sense, an interest in property is ordinarily held to mean a legal right of some kind. In certain applications the word means advantage, as when we say, “It is to his interest to do a certain thing ”; in others, it may indicate merely desire or excitement of feeling, as when one claims to have an interest in the outcome of an election. It its subjective sense interest is susceptible of both narrow and broad meanings, an example of the latter being when it is used as a collective name for all those carrying on a particular kind of business — e. g., “the coal interests.” When Con*233gress said “controlled by the same interests,” we believe it meant something broader than 'persons or individuáis. If “ the same interests ” was intended to mean only “ the same persons,” it would have been easy for Congress, by using the latter term, to have avoided all ambiguity. When two persons are guided in their action by a common interest (in the objective sense), they frequently constitute a single interest (in the subjective sense). If two individuals hold all the stock in two corporations, but in different proportions, their respective interests may be divergent or identical — it may be to the advantage of each to have the businesses so managed that a larger proportion of the profits will be attributed to the corporation in which he holds the most stock; or, on the other hand, it may be that the proportionate distribution is subordinated, in computing the advantage of one, to the desirability of increasing the combined profits of both companies where that can only be accomplished by attributing a larger proportion of the profits to the corporation in which his holdings are smaller.
In the case at bar three men holding directly 61.57 per cent of the stock of the furniture company held directly 75 per cent of the stock of the phonograph company. Indirectly, through the holdings of the former company in the latter, they owned an additional 15.39 per cent of the stock of the phonograph company and through their majority control of the furniture company they were in a position to vote all of the stock of the phonograph company. Their respective proportionate holdings in the two companies varied somewhat. Whether or not this variation is sufficient to justify the conclusion that their stock in the two corporations was controlled by the same interests is a question into which it is not necessary for us to go, for the reason that we are not convinced that they can be said to control substantially all the stock of both companies. That they controlled substantially all the stock of the phonograph company may be conceded for the purpose of argument, but we are not satisfied that in controlling 61.57 per cent of the stock of the furniture company they controlled substantially all of such stock. Much was stated in argument to the effect that the minority stockholders of the furniture company were friends and relatives of the majority stockholders, arid that their stock was therefore controlled by the majority stockholders. But there is no real evidence in the record demonstrating any such control. "The mere fact of relationship by blood or affinity does not of itself constitute proof of control, and the same may be said of friendship. -To our minds 61.57 per cent of the stock of the phonograph company can not, in the light of all. the circumstances of this case, be held to constitute substantially all of the stock, whether or not such a percentage in other circum*234stances might be held to be substantially all. The claim of the taxpayer for affiliation with the J. K. Kishel Furniture Co. must be rejected and the determination of the Commissioner approved.