*913OPINION.
Green :The issues involved in this proceeding are: (1) Whether the respondent erred in not allowing in invested capital any value on account of alleged agency contracts alleged to have been acquired by the petitioner for stock at the date of incorporation; (2) whether the respondent erred in not allowing as a deduction from gross income any portion of the $1,132.50 paid to the petitioner’s employees on December 24,1920; (3) whether the respondent erred in not allowing as a deduction from gross income any portion of the vacation expenses of the petitioner’s employees paid by the petitioner; and (4) whether the respondent erred in reducing the petitioner’s invested capital by the amount of $2,833.45, additional income and excess-profits taxes for 1917 not paid by the petitioner until after the close of the taxable year.
In connection with the first issue, the petitioner claims that at the time of incorporation it acquired for stock certain exclusive sales agency contracts having an actual cash value of $25,000. At the hearing, although much was said about alleged contracts with the Automatic Transportation Co. and the Cowen Truck Co., the petitioner was only successful in proving that at the time of incorporation it acquired from the predecessor partnership an exclusive sales agency for the Allen-Bradley Co., manufacturers of electric machinery and equipment. We have found from a consideration of all the evidence that the actual "cash value of the Allen-Bradley contract at the date acquired by the petitioner was at least $5,000.
Paragraph (a) (4) of section 326 of the Revenue Act of 1918 reads as follows:
Intangible property bona fide paid in ior stock or shares prior to March 3, 1917, in an amount not exceeding (a) the actual cash value of such property at the time paid in. (b) the par value of the stock or shares issued therefor, or (c) in the aggregate of 25 per centum of the par value of the total stock or shares of the corporation outstanding on March 3, 1917, whichever is lowest.
As to the distinction between tangible and intangible property, we must look first to the Revenue Act of 1918, which contains the following provisions:
The term “ intangible property ” means patents, copyrights, secret processes and formulae, good will, trade-marks, trade-brands, franchises, and other like property;
*914The term “tangible property” means stocks, bonds, notes, and other evidences of indebtedness, bills and accounts receivable, leaseholds, and other property other than intangible property.
We are of the opinion that contracts of the type here under consideration are intangible property and that when such contracts are acquired in exchange for stock, they are subject to the limitations provided in the section of the revenue act quoted above.
We are unable to determine from the record the value of the intangibles acquired in exchange for stock, and for this reason are unable to determine to what extent, if any, the Allen-Bradley contract should be included in invested capital; moreover we can not ascertain from the record what proportion of the capital stock originally issued in exchange for agency contracts can be, or was, properly allocable to the Allen-Bradley contract. The Commissioner’s action in reducing invested capital by the amount of $25,000, being the amount added thereto by the petitioner by reason of such agency contracts, is accordingly approved. Without evidence relative to the other contracts alleged to have been acquired by the petitioner at the date of incorporation we can do nothing but sustain the Commissioner’s determination with respect thereto.
Addressing ourselves to the second and third issues, we are of the opinion that the petitioner is entitled to deduct from gross income for the taxable year 1920 the amounts of $1,182.50 and $450.35. See Appeal of Boericke & Runyon, 3 B. T. A. 684, and Popular Dry Goods Co. v. Commissioner, 6 B. T. A. 78.
The respondent’s determination with respect to the last issue is approved upon the authority of Appeal of Russel Wheel & Foundry Co., 3 B. T. A. 1168.
Reviewed by the Board.
Judgment will be entered on 15 days' notice, under Rule 50.
Phillips and Sleekin' concur in the result.