*692OPINION.
Littleton:From the facts as proved we think the determination of the Commissioner was erroneous. While it is true that Schrader was largely, if not wholly instrumental in the organization of the petitioner and in one sense might be termed the promoter of that corporation, the transactions between him and the corporation can not be viewed from the standpoint of promotion services. Before the organization of petitioner, Schrader had acquired a binding option upon the assets of the St. Clair Title Office for which he had paid the sum of $5,000 in cash and he had procured a binding and enforceable contract by which Belleville Savings Bank obligated itself to sell and Schrader obligated himself to buy the Donovan-Guignon and Wolleson and Wolff companies for the sum of $100,000. The properties owned by these companies merged in one ownership were fairly and reasonably worth $275,000. When merger of ownership was effected, competition was eliminated, and an opportunity was afforded to procure reasonable prices for work which had formerly *693been done at such price as might be necessary in order to get the business. In addition, economies in the reduction of operating expenses could be and were effected. So long as these companies were separately engaged in business and in competition with each other there was not only a duplication, but a triplication of a large amount of work.
Schrader sold the properties he had acquired to petitioner at a price which represented their fair market value. That was the end of the transaction so far as petitioner was concerned. Schrader was dealing with a corporation, the stock of which he principally owned, but that fact did not require him to sell to it the properties of the three abstract companies which he owned at less than they were fairly worth, or at less than their market value. The transaction was bona fide.
Schrader sold the bonds of petitioner which had been delivered to him and likewise sold $80,000 of the stock of petitioner which had been issued to him, in order to provide himself with funds to discharge the obligations he had assumed in purchasing the St. Clair Title Office and the Donovan-Guignon and Wolleson & Wolff companies, but such transactions are not to any extent unusual, or subject to criticism. They were his individual affairs and were not transactions which he engaged in or carried on for the account of the petitioner, or in which petitioner was interested in any manner or to any extent, financially or otherwise. The petitioner’s invested capital can not be made to depend upon the obligations which Schrader incurred in the purchase of the properties which he sold to it, nor upon the manner in which he discharged those obligations.
We are of the opinion that petitioner is entitled to an invested capital of $200,000 as claimed, instead of $145,000 as determined by the Commissioner.
Judgment will be entered on 15 days’ notice, under Rule 50.
Considered by Smith and Love.