The Commissioner has determined a deficiency in income and profits taxes for the year 1921 in the amount of $1,679.68. The error assigned is the refusal of the Commissioner to affiliate the petitioner with the Cambridge Factory Co. The respondent concedes that the amount allowed by him for depreciation on an automobile is $202.78 less than it should be.
FINDINGS OP PACT.
Petitioner was, during the year 1921, a Massachusetts corporation and was engaged in the manufacture and sale of ice cream. The Cambridge Factory Co. was the owner of the building in which petitioner conducted its business.
During the year in question the stock of petitioner was held as follows:
Shares
Walter R. Comfort_ 6
Franklin Kronenberg- 18
Justin Kronenberg_ 1
Total_ 25
During the same period the stock of the Cambridge Factory Co. was owned as follows:
Shares
Walter R. Comfort_200
Franklin Kronenberg_ 99
Justin Kronenberg_ 1
Total_300
The building owned by the Cambridge Factory Co. was built in 1913 by Walter R. Comfort and Franklin Kronenberg at a cost of $18,000, of which amount $6,000 was paid by Kronenberg and the balance by Comfort. The building was constructed for use by petitioner and has always been so used by it.
On December 1,1919, a written agreement was entered into between Franklin Kronenberg and Walter R. Comfort whereby the latter agreed to sell to the former all of his stock in both companies, payment for the same to be made in installments over a period of five *438years, with the privilege on the part of Kronenberg to secure immediate delivery of the stock by making payment of all of the deferred amounts due. Title to the shares was held in the name of Comfort until full payment was made, which event occurred in December, 1924, at which time the stock was delivered to Kronenberg and the title to the shares was transferred on the books of both corporations to him.
After the execution of this agreement, the entire management and control of the business was left with Kronenberg and Comfort did not attend any of the stockholders’ or directors’ meetings or otherwise participate in the control of either corporation. Petitioner paid no rent to the Cambridge Factory Co. after the execution of the agreement between Kronenberg and Comfort for the use of the building, but it did pay the taxes, insurance, water rents and made any necessary repairs, charging the amounts so expended on its own books.
During the year 1921 the petitioner was affiliated with the Cambridge Factory Co. within the meaning of section 240 of the Revenue Act of 1921.
Judgment will he entered for the 'petitioner on 15 days' notice, wider Rule 50.
Considered by Geeen and Lansdon.