*737OPINION.
ARUndell: If there are deficiencies in these appeals they arise from sections 213 and 202 of the Revenue Act of 1918. Section 213 provides, in part:
The term “ gross income ”—
(a) Includes gains, profits, and income derived from * * * sales, or dealings in property, whether real or personal.
The pertinent portion of section 202 provides:
(b) When property is exchanged for other property, the property received in exchange shall for the purpose of determining gain or loss be treated as the equivalent of cash to the amount of its fair market value, if any, * * *.
Briefly stated, the facts in these appeals are that sometime subsequent to March 1, 1913, these individual taxpayers and others not here involved acquired undivided interests in certain oil leases and equipment at a cost, to all the tenants in common, of $105,423.21. On April 15, 1919, the fair market value of these leases and, equipment was $1,096,339.87. On the latter date the leases and equipment were transferred to a corporation organized by the tenants in common, who received in exchange, in proportion to their interests in the leases, capital stock of the corporation of a par value of $4,608,000, of a total authorized capital stock of $5,000,000.
The taxpayers contend that they realized no taxable gain upon the transfer to the corporation of their undivided interests in the leases in exchange for capital stock of the corporation, the transfer being-such as affected the form of ownership only and was not one of substance.
To support their contention they cite and place their principal reliance on the decision in the case of Weiss v. Stearn, 265 U. S. 242; 44 Sup. Ct. 490; 4 Am. Fed. Tax Rep. 3986.
The Commissioner contends Weiss v. Steam is not in point, and to support his views cites Marr v. United States, 268 U. S. 536; 45 Sup. Ct. 575; 5 Am. Fed. Tax Rep. 5393, and the decisions of this Board in Appeals of E. C. Huffman, 1 B. T. A. 52; J. K. Greenwood, 1 B. T. A. 291; D. F. Buchmiller, 1 B. T. A. 380; S. B. Quigley, 2 B. T. A. 159; G. Shapiro, 2 B. T. A. 620, and E. E. Davis, 2 B. T. A. 841.
In Weiss v. Stearn, supra, which involved the transfer of stock of an .old corporation to one newly formed, it was held that stock*738holders of the old company realized no taxable gain in the receipt of stock of the new company. This case is explained in Marr v. United States, 268 U. S. 536, at p. 541, as follows:
* * * In Weiss v. Stearn a new corporation bad, in fact, been organized to take over the assets and business of the old. Technically there was a new entity; but the corporate identity was deemed to have been substantially maintained because the new corporation was organized under the laws of the same State, with presumably the same powers, as. the old. There was also no change in the character of securities issued. By reason of these facts, the proportional interest of the stockholder after the distribution of the new securities was deemed to be exactly the same as if the par value of the stock in the old corporation had been reduced, and five shares of reduced par value, stock had been issued in place of every two shares of the old stock. Thus, in Weiss v. Stearn, as in Eisner v. Macomber, the transaction was considered, in essence, an exchange of certificates representing the same interest, not an exchange of interests.
.Continuing in the Marr case, the court says:
In the case at bar, the new corporation is essentially different from the old. A corporation organized under the laws of Delaware does not have the same rights and powers as one organized under the laws of New Jersey. Because of these inherent differences in rights and powers, both the preferred and the common stock of the old corporation is an essentially different thing from stock of the same general kind in the new. But there are also adventitious differences, substantial in character. A 6 per cent, non-voting preferred stock is an essentially different thing from a 7 per cent, voting preferred stock. * * * The case at bar is not one in which after the distribution the stockholders have the same proportional interest of the same kind in essentially the same corporation.
The taxpayers here say that by the exchange of leases for stock none of the stockholders gained anything really different from what they had had prior to the exchange; that the appreciation in value of the property before the transfer was evidenced by instruments of writing showing undivided interests in the oil leases and after the transfer this appreciation was evidenced by certificates of stock reflecting identically the same undivided interests, owned by the same persons.
There might be some grounds for saying that the stock certificates held by the stockholders represent the same amownt of interest in the leases as they had owned before the transfer, but to say that they represent the “same undivided interests” is not accurate nor in accordance with the settled law. Prior to the exchange the taxpayers held title to their interests in the leases with all the incidents of complete ownership; after the exchange the corporation had title, legal and equitable, to the whole property. Eisner v. Macomber, 252 U. S. 189, 208.
The taxpayers further urge that the change of ownership of the leases was a change in form and not in substance; the tenants in *739common created the corporation to serve them, controlled the corporation entirely, and in substance had nothing more than they had before the transfer. We think it immaterial that the former tenants in common controlled the corporation, as the fact remains that they and the corporation were separate entities. This fact is one that can not be ignored and the distinction between a corporation and its stockholders for income tax purposes is a legal distinction of substance and not merely of form. Eisner v. Macomber, 252 U. S. 189, 214; Cullinan v. Walker, 262 U. S. 134. And whether the stockholders had anything more after receiving the corporate stock than they had before is not the test. United States v. Phellis, 257 U. S. 156, 171; Rockefeller v. United States, 257 U. S. 176, 183. The true test is laid down in Weiss v. Stearn, 265 U. S. 242, where the court says, at page 254, that, if a stockholder is to be taxed on an exchange of property the transaction must be ■ “ something which gives the stockholder something really different from what he theretofore had.” This test, when applied here, gives the real solution to the question. The taxpayers, prior to the exchange, had the direct ownership, hence complete and full control, over their interests in the leases; after the exchange they were at most beneficial owners of the assets of the corporation, their shares therein being evidenced by stock certificates which carried with them no direct right of ownership in the assets. Appeal of E. C. Huffman, 1 B. T. A. 52, and cases therein cited. In other words, by this transaction the taxpayers received shares of stock which were property of a distinctly different kind from, and having entirely different attributes than, the property paid in by them.
Eeferring again to Weiss v. Stearn, we find in that case that, while technically a new entity was created in organizing a new company, the corporate identity of the old was deemed to have been substantially maintained because the new corporation was organized under the laws of the same State, with presumably the same powers as the old. Marr v. United States, 268 U. S. 536, 541. In a brief filed by amieus curiae it is pointed out that the owners of the oil leases were residents of Kansas and that the corporation was organized under the laws of that State; that the corporation had no greater power in disposing of the oil than the owners, in the aggregate, had of disposing of the same oil. These statements overlook the fact that the Weiss v. Stearn decision was based, in part, on the substantial maintenance or continuance of the corporate identity, whereas in these appeals there is a complete change of identity — a change from ownership by individuals to corporate ownership. While the power of the corporation to dispose of the oil was per*740haps no greater than that of the tenants in common, it will not be seriously contended that the powers of a corporation and of an individual, generally, are the same. If a comparison of powers is to be made it must be of powers generally, and not of any particular power.
It is also contended that for a tax to result under section 202 from an exchange of property requires two distinct things as property, and that, until a new corporation has issued its stock, it has no property; that property received in exchange, if a taxable gain is to result, must have a value inherent in itself prior to the exchange.
These contentions overlook the fact that the capital stock of a corporation is in itself property. De Ganay v. Lederer, 250 U. S. 376. In Merchants Loan & Trust Co. v. Smietanka, 255 U. S. 509; 3 Am. Fed. Tax Rep. 3102, which involved the taxability of gain on the sale of capital stock, it is said:
Plainly the gain we are considering was derived from the sale of personal property * * *.
The method of determining the value of stock issued in exchange for property has been considered by the Board in Appeal of William Ziegler, Jr., 1 B. T. A. 186, 192, where we held:
The usual method of appraising stock issued for property where there is no evidence of the market value of the stock is to say that the stock is deemed equivalent in value to the property for which it was issued, and by determining the value of the property one can determine the value of the stock.
In the present appeals the fair market value of the property transferred to the corporation is stipulated to be $1,096,339.87. Applying the rule laid down in the Ziegler appeal, the fair market value of the stock of the Orlando Petroleum Co. is the same amount. This is the figure used by the Commissioner and the taxpayers have offered no proof that the fair market value of the stock was in a different amount than that here found.
We conclude that the taxable profit realized in these cases is the difference between the cost of the property to the taxpayers and the value of the corporate stock received in exchange therefor. In the case of Napoleon B. Burge the taxable profit is the difference between $5,490.74 and $57,101.03, or $51,610.29. In the case of C. B. Burge the amount of taxable gain realized is the difference between $1,098.15 and $11,420.21, or $10,322.06.
Order of redetermination -will be entered on 15 days'1 notice, under Bule 50.