*180OPINION.
Marquette :We have heretofore held that a distribution by a corporate dividend out of surplus occurs when the dividend is declared and not when it is paid. Appeal of A. H. Stange, 1 B. T. A. 810; Appeal of Harmon W. Hendricks, 4 B. T. A. 1257. The dividend herein was declared December 27, 1916, and it therefore constituted a distribution of surplus or profits at that time, regardless of the fact that payment was not made until a later date; and no part of the distribution could therefore have been made from earnings for the year 1917. It follows that the Commissioner erred in taxing any part of the dividends received by the petitioner at the 1917 rates.
Order of redetermination will be entered on 15 days’ notice, under Rule 50.