*2244 Upon evidence that taxpayer partnership had capital at the beginning and end of the year and that, in addition to making sales on commission, it derived a substantial part of its gross income from the purchase and sale of goods as a principal, held, that the partnership was not one with "no invested capital or not more than a nominal capital," within sec. 209, Revenue Act of 1917.
*785 The respondent determined a deficiency for 1917 of $3,055.11 profits tax by applying the special method of section 210, Revenue Act of 1917. Petitioner, admitting some of the deficiency, attacks *786 so much of it as exceeds that which would result from the application of section 209. Petitioner conceded at the trial that if section 209 should be held inapplicable, the entire deficiency is correct.
FINDINGS OF FACT.
Petitioner was in 1917 a partnership dealing in box shook in California. It had been started in 1916, growing out of certain contracts which one of the partners had as an individual to sell as agent*2245 on commission the product of certain mills. No capital was invested in the business when the partnership was formed. At the end of 1916, after paying expenses and salaries of partners, net earnings remained of $6,372.30 which were left in the business.
In 1917 the agency business increased and, because of transportation difficulties delaying deliveries to regular customers, petitioner bought and sold directly on its own account, such sales amounting to $90,610.38. It also had "straight sales as principal" amounting to $148,636.93. Its sales on commission amounted to $685,699.97.
It carried no goods in stock. It had no salesmen except the two partners. It employed a stenographer and bookkeeper.
The agency sales were billed by the mill to petitioner and by petitioner to customer, and payment was made by customer to petitioner and petitioner to mill.
In 1917 petitioner charged off $7,587.40 as bad debts due on sales made by itself as principal.
Balance sheets of petitioner's book assets and liabilities were as follows:
| Jan. 1, 1917 | Dec. 31, 1917 | |
| BOOK ASSETS | ||
| Cash | $11,522.33 | |
| Notes receivable | 700.00 | |
| Accounts receivable | $47,735.69 | 117,606.30 |
| Inventory | 1,021.25 | |
| Automobiles | 1,528.75 | 2,897.75 |
| Office Fixtures | 769.35 | 997.35 |
| Stock in Big Lakes Box Co | 5,000.00 | |
| Liberty bonds | 3,500.00 | |
| 50,033.79 | 143,244.98 | |
| BOOK LIABILITIES | ||
| Bank overdraft | 556.69 | |
| Accounts payable | 25,663.39 | 72,484.49 |
| Bills payable | 16,623.14 | 36,838.63 |
| Reserve for depreciation | 818.27 | 1,497.55 |
| Capital and partners' accounts | 6,372.30 | 32,424.31 |
| 50,033.79 | 143,244.98 |
*2246 OPINION.
STERNHAGEN: From the foregoing facts found from the evidence it appears that petitioner had capital at the beginning of the year of $6,372.30 and at the end of the year of $32,424.31. It bought *787 and sold on its own account in substantial amounts. It can not therefore be said to have, as the statute requires, "no invested capital or not more than a nominal capital." ; .
Judgment will be entered for the respondent.