*3587 Under the evidence held that the petitioner and his three children were partners during the years 1920 and 1921 in the operation and management of the theatres involved herein, and that there should be included in the petitioner's income only his distributive share of the partnership profits for those years.
*164 This proceeding is for the redetermination of a deficiency in income taxes asserted by the respondent for the years 1920 and 1921 in the amounts of $6,956.27 and $1,277.39, respectively. The petitioner alleges that the respondent erred in including in the petitioner's income the entire profits of a partnership of which he was a member.
FINDINGS OF FACT.
The petitioner is an individual residing in Springfield, Ill. During the years 1920 and 1921 and for some years prior thereto, he was in the business of operating moving-picture houses, and his sons, Russell P., and Harry A Loper assisted him in managing the business.
The petitioner owned the Kimbark Theatre in Chicago and late in 1919 arranged to put up a theatre, the Lyric, *3588 in Springfield. He did not choose to assume the entire management of this theatre, and therefore suggested to his two sons and a daughter that the four of them make the business a partnership matter, each to have an equal one-fourth interest. The Lyric Theatre was not to be paid for in cash but the petitioner assumed the initial expense himself, the balance to be paid from the earnings.
During the years 1920 and 1921 no exact distribution of earnings was made. Each son received about $50 per week for managing the Kimbark and the Lyric, respectively, but there was no definite limit on their drawing accounts. It was understood, however, that only necessary living expenses were to be drawn and the balance of the earnings was to be applied to pay off the indebtedness on the property. The daughter reviewed pictures and assisted in their purchase and helped in various ways around the theatre.
The title to the property was taken in the name of the petitioner. The business was conducted under the name of H. T. Loper, and the bank account carried in that name. Each son could draw on the , *165 bank account. The amounts so drawn were charged against their shares of the net*3589 profits.
There was no written agreement of partnership, nor was any certificate of partnership filed with the county or city authorities. The film companies and the bank were informed of the partnership agreement. Income-tax returns for 1920 and 1921 for the partnership were filed by "H. T. Loper, member of partnership." In these returns the names of the four partners were set forth, and the amounts of their income from the business. For the same years the daughter filed income-tax returns showing income from the partnership of H. T. Loper, which tally in amount with the partnership returns; the same is true of H. T. Loper's individual return for the year 1920, and also of Harry A. Loper's individual returns for 1920 and 1921.
The respondent included the entire profits of the business in the petitioner's income for the years 1920 and 1921.
OPINION.
MARQUETTE: We think that the petitioner and his three children intended to form a partnership about January 1, 1920, for the purpose of managing, conducting and owning the Lyric and Kimbark Theatres. The evidence before us shows that it was talked over between them, and between the petitioner and his attorney; that income-tax*3590 returns for the taxable years were filed for the partnership; that the petitioner and also his daughter, and at least one of his sons, filed individual returns for the taxable years showing income received from the partnership; that the bank and film companies were notified of the existence of the partnership; that the sons, instead of receiving for their services salaries from their father, the petitioner, as had been the case prior to 1920, drew against the partnership bank account for their living expenses; that these drafts were charged against their individual shares of the net profits, and that the sons, at least, had authority to bind the partnership by contracts for picture films, and to check against the partnership bank account.
We think this evidence sufficient to show a definite intent and purpose to form the partnership. This intent being present, and subsequently acted upon as it was in this case, is sufficient to create a partnership inter sese.
We conclude, therefore, that the respondent is in error in taxing the petitioner as an individual for the entire amount of net income from the Lyric and Kimbark Theatres for the taxable years.
Reviewed by the Board.
*3591 Judgment will be entered under Rule 50.
SIEFKIN did not participate.