*316OPINION.
MaRQuette:The Commissioner has conceded that the taxpayer’s closing inventory as used by it in making its return of income for the fiscal year ended March 31, 1920, is correct; that he was in error in increasing the inventory by the amount of $16,344, and that the taxpayer’s income should be adjusted accordingly. This leaves for consideration only the question as to whether or not the taxpayer is entitled to include in its invested capital, for the year involved herein, the amount of $74,500, represented by notes payable by Firsching to certain banks, which the taxpayer assumed when it took over Firsch-ing’s business. No evidence was presented relative to this issue, except a report of an examination made by a revenue agent, which was admitted by agreement of counsel. The only facts before the Board concerning the amount of $74,500 which the taxpayer seeks to include in invested capital are those admitted by the pleadings and contained in the report of the revenue agent. While these facts are rather meager, they are, however, sufficient, we think, to show that the corporation, when it took over Firsching’s business, acquired all of the assets and assumed the liabilities thereof, and issued stock to him of a par value equal to the net worth of the business. The notes involved herein were assumed by the taxpayer, together with the other liabilities of the business, and became its obligations regardless of the fact that they were endorsed and secured by Firsching. They represented borrowed capital and could no more be properly included in the taxpayer’s invested capital than any other notes or accounts payable. We are of the opinion that the Commissioner’s action in excluding from the taxpayer’s invested capital the amount represented by these notes was proper.
Order of redetermination will be entered on 15 days’ notice, under Bule 50,