Paris Cloak, Suit & Millinery House v. Commissioner

PARIS CLOAK, SUIT & MILLINERY HOUSE AND PALAIS DE MODES, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Paris Cloak, Suit & Millinery House v. Commissioner

Docket Nos. 5500, 5502.

United States Board of Tax Appeals

5 B.T.A. 189; 1926 BTA LEXIS 2939;

October 26, 1926, Decided

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Affiliation under the provisions of section 240(b) of the Revenue Act of 1921 determined.

H. H. Tooley, C.P.A., for the petitioners.

George E. Adams, Esq., for the respondent.

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LANSDON

The Commissioner has found deficiencies in income and profits taxes for the years 1920 and 1921 in the amounts of $1,502.05 and $2,177.39 as to the Paris Cloak, Suit & Millinery House, and for the year 1921 in the amount of $4,916.44 as to the Palais de Modes. The only issue is whether the petitioners and the New York Cloak & Suit House were affiliated during the taxable years. The appeals were consolidated for hearing and decision.

FINDINGS OF FACT.

The petitioners and the New York Cloak & Suit House are California corporations, resident in Los Angeles. During the taxable years the stockholders and stockholdings of the three corporations were as follows:

Name of	New York Cloak & Suit House.	Palais de Modes.
stockholder.	Number of	Percent of	Number of	Percent of
	shares.	holdings.	shares.	holdings.
1. J. J. Haggarty	9,990	99.90	2,499	55,533
2. J. C. Haggarty	9	.09	2,000	44.445
3. B. M. Haggarty	1	.01	1	.022
	10,000	100.00	4,500	100.00

Name of	Paris Cloak, Suit & Millinery House.
stockholder.	Number of shares.	Per cent of holdings.
1. J. J. Haggarty	5,099	30.99
2. J. C. Haggarty	4,650	46.50
3. B. M. Haggarty	251	2.51
	10,000	100.00

The three stockholders are a family group in which J. J. Haggarty is the husband of B. M. Haggarty and the father of J. C. Haggarty. During the years 1920 and 1921, J. J. Haggarty was the president of each of the three corporations; J. C. Haggarty was secretary-treasurer of the New York Cloak & Suit House and the Paris Cloak, Suit & Millinery House, and vice president of the Palais de Modes; B. M. Haggarty was vice president of the New York Cloak & Suit House and the Paris Cloak, Suit & Millinery House, and secretary-treasurer of the Palais de Modes. The three corporations were operated as a single business unit, with all the accounts kept in one set of books and all operating funds deposited in a single bank account.

OPINION.

LANSDON: The petitioners were affiliated with the New York Cloak & Suit House during the taxable years. Appeals of Schloss Brothers Co., B.T.A. 581; .

Judgment will be rendered for the petitioners on 20 days' notice, under Rule 50.