*1097 Petitioner was organized in 1922 by three members of a partnership, to whom petitioner's stock was issued in exchange for assets transferred to it by the partnership and the three partners individually. In 1925 one of the stockholders acquired all outstanding shares of petitioner's capital stock, and thereafter used petitioner as his personal holding or investment company until his death in 1938. Held, petitioner was availed of in the taxable year ended November 30, 1930, for the purpose of preventing the imposition of the surtax upon its sole shareholder through accumulation of its gains and profits, and is subject to the penalty tax imposed by section 104 of the Revenue Act of 1928.
*1161 Respondent determined a deficiency of $56,543.96 in petitioner's income tax liability for the fiscal year ended November 30, 1930, computed under the provision of section 104 of the Revenue Act of 1928. Petitioner alleges that respondent erred in holding it was subject to tax under section 104, and in failing to allow certain*1098 deductions.
FINDINGS OF FACT.
Petitioner is a corporation, organized under the laws of Delaware on December 9, 1922, to succeed to and for the purpose of holding certain assets and assuming certain liabilities of B. H. Howell Son & Co., a partnership composed of Frederick C. Howell, James H. Post, and Thomas A. Howell.
B. H. Howell Son & Co. for many years prior to 1922 had been engaged in business as commission merchants and fiscal and financial agents for various sugar companies outside of the United States and in this country. At the end of 1922 many of the contracts the partnership had with such companies to distribute their products would expire, and the partners early in 1922 determined to dissolve the partnership, discontinue its business, and form a new corporation to take over certain of its assets and liabilities. Such new corporation, known as the Suffolk Securities Corporation, petitioner herein, was subsequently formed on December 9, 1922.
Because of the fact that some of the partnership's contracts were not due to expire in 1922, the partners decided to continue the partnership to fulfill and perform these contracts. Subsequently, during the *1162 *1099 year 1923, but prior to the month of August of that year, the partners decided to form another corporation to take over the remaining assets and liabilities not theretofore acquired or assumed by petitioner, and also the operations and going business of the partnership. On or about September 27, 1923, a corporation, known as "B. H. Howell Son & Company, Inc.", was organized and took over such assets and liabilities and succeeded to the business previously carried on by the partnership.
On December 28, 1922, the members of the partnership made an offer in writing to petitioner corporation, setting forth terms upon which the assets and liabilities of the partnership and certain assets of the individual members were to be transferred to petitioner, and the amount of petitioner's stock each was to receive. Such offer was accepted by petitioner's board of directors on December 29, 1922.
The officers of petitioner corporation at the time of its organization were the members of the partnership, and stock was issued to them on the basis of the value agreed to by the partners, in accordance with their respective interests in the partnership assets transferred to petitioner and other*1100 assets owned by the partners individually which were so transferred, as follows:
| Preferred.stock | Common stock | |||
| Name | Shares | Agreed value | Shares, no par | Agreed value |
| Frederick H. Howell | 27,900 | $2,790,000 | 3,026 | $652,293.50 |
| James H. Post | 24,275 | 2,427,500 | 5,270 | 1,136,016.78 |
| Thomas A. Howell | 1,704 | 367,319.28 | ||
| Total | 52,175 | 5,217,500 | 10,000 | 2,155,629.56 |
The assets transferred to petitioner from the partnership included furniture and fixtures, $5,000; real estate securities, $540,955.80; other securities, $3,017,671.08; claim against United States Government, $1,200,000; claim against estate of H. M. Hoyt, $407,500; accounts receivable, $1,563,890.04; bills receivable, $77,439.84; and cash, $200,000. Assets owned by the partners individually were also transferred to petitioner as follows: From Frederick H. Howell, stocks and bonds, $1,330,934; accounts receivable, $190,225; and from James H. Post, stocks and bonds, $2,110,412; accounts receivable $537,075. Petitioner assumed liabilities of the partnership as follows: National City Bank of New York, $3,322,660.11; miscellaneous accounts payable, $485,313.09. The agreed value of*1101 the net assets received by petitioner was $7,373,129.56.
Frederick H. Howell, James H. Post, and Thomas A. Howell were the sole stockholders of the petitioner until February 5, 1925, when *1163 Frederick H. Howell withdrew from the corporation and surrendered his stock, both preferred and common, in consideration of which petitioner transferred certain of its assets and liabilities, at an agreed valuation equal to the cost of the surrendered stock, to the Rockland Securities Corporation, the stock of which was owned by Frederick H. Howell.
Thomas A. Howell, the owner of 1,704 shares of petitioner's common stock, transferred his shares to a corporation, the capital stock of which he owned, and that corporation later, but prior to February 5, 1925, transferred the 1,704 shares of petitioner's stock to Frederick H. Howell and James H. Post, in equal amounts, in exchange for other stocks. The shares of petitioner's stock thus acquired by Frederick H. Howell were transferred to petitioner and canceled, along with the other shares owned by him on February 5, 1925. James H. Post was the sole stockholder of the petitioner corporation from February 5, 1925, until the time of*1102 his death in 1938.
Petitioner from the date of its organization to and including the taxable year kept its books and filed its income tax returns on the accrual basis, and such returns reported no income or taxes due. Petitioner's assets were carried on its books and on the balance sheets in its income returns at the agreed cost to it, which balance sheets showed a deficit at the beginning and end of each year, except at the end of the taxable year 1930 it showed a book surplus of $72,947.03.
James H. Post, sole stockholder of petitioner, filed personal income tax returns for each of the years 1922 to the time of his death in 1938, and for the years 1930 and 1931 filed joint returns for himself and wife. Amounts were reported in his personal returns as dividends received from domestic corporations as follows:
| 1926 | $87,162.80 |
| 1927 | 99,873.24 |
| 1928 | 100,975.09 |
| 1929 | $112,128.75 |
| 1930 | 270,128.37 |
| Do (Joint) | 338,694.14 |
No dividends were declared or paid by petitioner corporation to its shareholders from the time of its organization to and including the taxable year ended November 30, 1930. During that period it received dividends from domestic corporations*1103 as follows:
| 1923 | $113,086.87 |
| 1924 | 191,954.25 |
| 1925 | 92,604.05 |
| 1926 | 30,934.75 |
| 1927 | 41,513.08 |
| 1928 | $59,711.00 |
| 1929 | 126,489.33 |
| 1930 | 160,762.52 |
| Total | 817,055.85 |
During the period from September 20 to November 30, 1926, James H. Post borrowed $42,066.33 from petitioner, which amount, together with interest thereon, was paid back on February 15, 1927. From January 30 to March 27, 1928, he borrowed $27,000, which he repaid *1164 with interest on April 24, 1928. From September 4, 1928, to November 30, 1930, he borrowed $662,019.63, and repaid $25,000 on August 25, 1930. These loans were carried on petitioner's books as accounts receivable, together with interest thereon, and the interest was reported in its income tax return each year.
On November 30, 1930, petitioner had the following accounts, notes, and debts payable:
| National City Bank of New York | $900,000.00 |
| Mary Post Cantaine | 55,002.95 |
| B. H. Howell Son & Co., Inc | 481,323.88 |
| Morgan Davis & Co | 13,988.08 |
| Louisa Wells Post | 220,011.92 |
| Thrift Club | 9,801.71 |
| Rockland Securities Corporation | 6,688.40 |
| Miscellaneous | 8,625.00 |
| Total | 1,695,441.94 |
At November 30, 1930, petitioner*1104 held assets having a total book value or cost of $3,534,079.81, and a total market value of $2,625,810.03.
For Federal income tax purposes, the partnership and its individual members treated the transfer of assets and liabilities to petitioner corporation in exchange for its capital stock as a nontaxable exchange.
The claim against the United States Government, which was transferred to petitioner at an agreed valuation of $1,200,000 in exchange for stock, arose out of losses suffered by the partnership in 1920 and 1921 as a result of transactions in connection with the purchase and importation of sugar from the Argentine Republic, which transactions were entered into at the suggestion and request of certain officials of the United States Government. The partnership filed a claim against the Government through the Department of Justice for reimbursement of its losses, but at that time there was no authority under the law for payment of the claim and it was refused. Subsequently, a joint resolution was passed by Congress and approved by the President February 9, 1923, authorizing the Sugar Equalization Board to settle these losses.
*1105 The members of the partnership claimed their proportionate shares of the losses as deductions from gross income in their respective income tax returns for the years 1920 and 1921, but the deductions were disallowed by respondent in determining deficiencies for those years. Upon appeals to the Board, respondent's action was reversed and the deductions allowed as claimed. The facts and circumstances of the transactions mentioned are set forth at length in the consolidated report of the Board in the cases of James H. Post et al., promulgated June 11, 1928, and published at , which, in accordance with the stipulation of the parties in the present proceeding, are made a part hereof by reference.
*1165 On May 25, 1923, petitioner corporation received the net amount of $1,000,000 and on December 7, 1923, received the net amount of $98,176.16 as a result of the transactions referred to in James H. Post et al., supra. The amounts so received by petitioner were not recorded or reflected in any way in either its profit and loss account or surplus account, and were not reported or included as taxable income in determining its Federal income*1106 tax liability for the fiscal years ended November 30, 1923 and 1924, nor was any Federal income tax paid on account of the receipt of those amounts by either petitioner or its sole stockholder.
The claim against the Hoyt estate in the amount of $407,500, which was transferred to petitioner by the partnership in exchange for shares of petitioner's capital stock, arose in the following circumstances: On December 13, 1918, and March 10, 1919, the partnership of B. H. Howell Son & Co. subscribed to stock in the El Salvador Silver Mines Co. to the extent of $407,500, which was paid for out of funds of the partnership. The partnership set up this stock on its books of account as an asset, and at the same time charged the individual partners in certain special accounts in their individual names with the amount of the cost of the stock which each partner had subscribed for. Subsequently, but prior to December 1, 1922, the partners learned that the purchase of this stock had been procured by what they considered to be fraudulent representations; that the stock was worthless; and that Henry M. Hoyt, president of the Silver Mines Co., and Thomas Frothingham, who had some connection with*1107 the Silver Mines Co., were, in the opinion of the partners, responsible for the fraud and personally liable for the amounts paid for the stock. Henry M. Hoyt died January 4, 1921, leaving a large estate.
Petitioner corporation, in making the original entries of the assets acquired from the partnership and individual partners at the time of its organization in December 1922, set up as an asset "claim against Hoyt Estate $407,500", and subsequently, on February 5, 1925, in connection with the transaction with the Rockland Securities Corporation hereinabove referred to, petitioner made entries on its books resulting in a reduction in the account of $203,750.
On June 7, 1926, the former partners of B. H. Howell Son & Co. brought suit in the Supreme Court of the State of New York against the executors of the estate of Henry M. Hoyt for the amount of $467,001. This suit was subsequently compromised and settled on May 4, 1929, for $212,600, and as a result thereof petitioner delivered or destroyed the certificates of stock in the El Salvador Mines Co. Releases to the executors of the estate of Henry M. Hoyt were executed and delivered by plaintiffs in the aforesaid suit, and the*1108 proceeding was thereupon terminated.
*1166 Of the amount received in this settlement, petitioner later received $94,870, leaving an unpaid balance of $114,290.54 in the book account, which included auditing and legal fees of $5,410.54. This unpaid balance was charged off petitioner's books of account December 1, 1929, but was not taken as a deduction in its income tax return for the fiscal year ended November 30, 1930.
Prior to the taxable year 1930, petitioner invested the amount of $11,110 in the capital stock of the Triangle Agricultural Corporation. During the year 1926 petitioner also advanced as loans to the Triangle Corporation and to C. C. Smith, president of that corporation, the amounts of $2,993.39 and $8,980.28, respectively.
The Triangle Corporation was organized by C. C. Smith sometime prior to the year 1927, with the financial assistance of James H. Post, president of petitioner, who subscribed for stock of the Triangle Corporation and advanced money both to the corporation and to Smith personally. During the first two years after organization of the Triangle Corporation, Smith was in charge of the business of the corporation at Wilmington, Delaware, *1109 and a small profit was realized by the corporation during that period. Thereafter, the business of the corporation was conducted by a superintendent, with the result that on account of constant losses the business was discontinued about April 1929. Beginning in 1929, after closing the business, Smith endeavored to pay off the corporation's indebtedness, and also made futile efforts to sell the remaining assets of the corporation, consisting of plant, equipment, and leasehold. On October 9, 1932, such assets finally were sold by Smith to the Eastern States Farmers' Exchange, Springfield, Massachusetts, for the sum of $2,250.
Under date of October 16, 1930, Smith wrote a letter to James H. Post, president of petitioner, reading in part as follows:
The collapse of this business is exceedingly distressing to me. Foor the last year and a half I have paid out over $10,000 out of my own pocket applying on the corporation's indebtedness. I am starting to pay the stock subscription of some of the smaller stockholders who were hard hit in the stock market crash. In fact, I have already paid back in full four of these smaller stockholders, and it is my purpose, Mr. Post, as the good*1110 Lord gives me strength, to pay every dollar of the Triangle's indebtedness, including stock subscriptions and all other advances made to the corporation or to me personally. This means that I am assuming an obligation of approximately $35,000. On the basis of my present income, it will take me several years to liquidate this amount. I hope sometime next year to begin paying you part of the moneys you so generously advanced.
Petitioner carried on its books an asset account representing the investment of $11,110 in the capital stock of the Triangle Agricultural Corporation, and also the loans made to that corporation and to Smith in the respective amounts of $2,993.39 and $8,980.28. Petitioner has never received or recovered any amount from its investment *1167 in such stock, and during the taxable year ended November 30, 1930, it charged off the amounts of $2,993.39 and $8,980.28 as uncollectible debts.
During the taxable year, petitioner made the following sales of stock of the National City Bank:
| Date of sale | Shares | Cost | Sale price | Loss |
| Aug. 8, 1930 | 100 | $15,925.00 | $12,624.20 | $3,300.80 |
| Aug. 11, 1930 | 100 | 16,125.00 | 12,074.20 | 4,050.80 |
| Aug. 11, 1930 | 100 | 17,125.00 | 12,524.20 | 4,600.80 |
| Aug. 12, 1930 | 100 | 13,725.00 | 12,211.70 | 1,513.30 |
| Total | 62,900.00 | 49,434.30 | 13,465.70 |
*1111 On September 2, 1930, petitioner purchased 200 shares of stock of the National City Bank for $28,375.
In filing its income tax return for the taxable year, petitioner claimed a deduction of $13,465.70 representing losses sustained on sales of National City Bank stock, of which respondent disallowed $7,351.60. This action of respondent was based on the premise that, since petitioner had purchased 200 shares of the same stock within 30 days of the first two sales made on August 8 and August 11, 1930, it sustained no deductible loss on those sales under section 118 of the Revenue Act of 1928.
During the taxable year, petitioner was a mere holding or investment company, and it was availed of for the purpose of preventing the imposition of the surtax upon its sole stockholder through the medium of permitting it gains and profits, to accumulate instead of being divided or distributed.
OPINION.
HILL: The first question for decision in this case is whether or not petitioner is subject to the tax imposed by section 104(a) of the Revenue Act of 1928, by reason of the fact that it was formed, or during the taxable year ended November 30, 1930, was availed of, for the purpose of*1112 preventing the imposition of the surtax upon its sole shareholder through the medium of permitting its gains and profits to accumulate instead of being divided or distributed.
Petitioner reported a net loss on its 1930 income tax return in the amount of $565,025.52, which respondent reduced to a net loss of $47,674.60 by eliminating prior year net loss and certain deductions for bad debts and stock losses claimed by petitioner. The parties agree, therefore, that in no event is any tax due from petitioner under section 13 of the 1928 Revenue Act. Respondent determined the deficiency in controversy on the basis that petitioner was subject to tax under section 104, supra, and accordingly included in net income dividends *1168 received in the amount of $160,762.52, which dividends are not taxable to petitioner under section 13.
Petitioner alleges that respondent erred in computing its tax liability under section 104, and, in the event we should hold it is subject to the tax imposed by that section, assigns as additional error the disallowance by respondent of certain deductions for bad debts and stock losses, more fully referred to hereinbelow.
*1113 If petitioner was either (1) formed, or (2) availed of in the taxable year for the purpose described in the cited statute, it is subject to the penalty tax as determined by respondent. .
Petitioner on brief indulges in considerable argument in an effort to show that it was not formed for the prohibited purpose. We need not consider this point, for reasons which presently appear. Conceding that petitioner was formed, as its contends, for the sole purpose of taking over certain assets and assuming certain liabilities of the partnership of B. H. Howell Son & Co. with a view to discontinuance of the partnership business, it does not necessarily follow that petitioner in the taxable year 1930 was not availed of for the purpose of enabling its sole stockholder to escape surtax.
Petitioner corporation was organized in December 1922, with three stockholders who were members of the partnership mentioned, but in February 1925 James H. Post became petitioner's sole shareholder. Thereafter, and until the death of Post in 1938, the evidence, in our opinion, justifies the conclusion that Post, who possessed securities worth several*1114 million dollars, used petitioner merely as his personal holding or investment company. Under section 104(b), the fact that any corporation is a mere holding or investment company constitutes prima facie evidence of a purpose to escape the surtax, and the burden is on petitioner to disprove the statutory presumption and the Commissioner's determination, ; affd., . The evidence, we think, falls measurably short of such disproof.
It is not contended that in the taxable year petitioner was a business corporation; that is, one engaged in carrying on a business enterprise. It was merely holding a limited amount of securities transferred to it by Post, and in that connection buying and selling securities, and investing and reinvesting its funds.
Petitioner urges that it was not in fact availed of in 1930 for the purpose of enabling Post to escape surtax through accumulation of its gains and profits, for the reason that it had no such accumulation. Substantially, this is the only ground upon which petitioner defends against respondent's contention that it was availed of in the tax year for the prohibited*1115 purpose. It is not denied that at the end of the *1169 fiscal year 1930 petitioner's balance sheet disclosed a book surplus of $72,947.03, nor that it then held assets having a book value or cost which exceeded its accounts, notes, and debts payable by the amount of $1,838,637.87. It further appears that the market value of its assets exceeded its obligations payable by the amount of $930,368.09. Thus, disregarding capital stock, petitioner was not insolvent on the basis of either cost or market value of its assets. But petitioner says that, if its surplus had been computed on the basis of the then present value of its assets instead of original cost, its balance sheet at the end of the taxable year would have shown a deficit of over a million dollars instead of a small book surplus. We rejected a similar contention, strongly urged, in , saying at page 857:
The Board has already held that when considering a holding or investment company the diminution in market value of its securities may not be offset against income derived through gains and profits, interest, and dividends, so as to establish that the corporation was not availed*1116 of to save the shareholders from surtax. ; * * * * * *. As to a business corporation actually engaged in commercial operations, the effect of market values upon its surplus has been recognized as more substantial and the argument more engaging. .
Petitioner received dividends from domestic corporations during the years 1923 to 1930, inclusive, in the total amount of $817,055.85. No dividends were declared or paid by petitioner during that period. It received dividends from domestic corporations during the tax year in the amount of $160,762.52, which it accumulated instead of distributing to its sole stockholder. It thereby did in fact save its sole stockholder from surtax. The statute does not operate merely because of such actual effect - only if such effect was the purpose, ; affd., ; certiorari denied, ; *1117 . But here the presumption is that the accumulation of the dividends received by petitioner from other domestic corporations was for the purpose actually effected and petitioner has not disproved that such purpose was to enable its stockholder to excape surtax.
The dividends received by petitioner and in controversy here would have been taxable in the hands of its sole stockholder, irrespective of the diminution in market value of securities he did not sell, "and hence the purpose to enable him to escape surtax is not disproved by evidence of market value of securities held by his corporate instrument." , and decisions therein cited.
Respondent's determination that the petitioner is subject to the tax imposed by section 104 is approved.
*1170 Respondent argues that the $1,098,176.16 received by petitioner in 1923 from the payments made by the Sugar Equalization Board constituted income to it and should have been reflected in its surplus account at the end of the taxable year, which would have more than offset the deficit petitioner contends would have resulted from valuing*1118 its securities at market, instead of cost. Respondent further says that because the partners transferred their claim against the Government to petitioner and thereafter treated the matter as a capital transaction of the corporation, they escaped tax on the payments received from the Sugar Equalization Board in 1923. Respondent interprets these facts as persuasive proof that petitioner was "formed" for the purpose described in section 104. While some support for respondent's contentions in this connection undoubtedly may be found in the evidence, we prefer to rest our decision on the ground hereinabove set out. We deem it unnecessary, therefore, to devote further discussion to this point.
Petitioner contends that, even if we should hold on the facts that it is subject to tax under section 104, no penalty tax can be imposed upon it for the taxable year before us for the reason that respondent erroneously disallowed, or failed to allow, deductions which exceed the net income determined by him under section 104, and thus there is no basis for computation of the tax.
The first deduction in respect of which petitioner complains involves the so-called claim against the Hoyt estate. *1119 The circumstances surrounding this claim and how it arose are fully set forth in our findings of fact above. Petitioner acquired the claim in exchange for shares of its stock, and included it in its asset account at the agreed valuation of $407,500, but in 1925 in connection with the transaction with the Rockland Securities Corporation it reduced the amount to $203,750. In 1926 a suit was instituted against the Hoyt estate for the amount of $467,001, which suit was subsequently compromised and settled on May 4, 1929, for $212,600. As a result of this settlement petitioner delivered or destroyed the certificates of stock in the El Salvador Silver Mines Co. and the proceeding was thereupon terminated. Of the amount received in settlement, petitioner's share amounted to $94,870, leaving an unpaid balance on its books of $114,290.54, including $5,410.54 auditing and legal fees, which amount was charged off its books on December 1, 1929. Such amount was not claimed as a deduction in petitioner's income tax return, but it alleges that respondent erred in failing to allow the amount as a deduction in computing the net income taxable under section 104.
The facts do not support petitioner's*1120 contention. The suit instituted to enforce collection of the Hoyt claim was compromised and *1171 settled on May 4, 1929, and the amount of petitioner's claim, in excess of its share of such settlement, became worthless on that date. The loss was sustained prior to the beginning of the taxable year 1930, notwithstanding the entry charging the amount off petitioner's books was recorded on December 1, 1929, the first day of the taxable year. Whatever amount of loss was sustained, if any, is allowable only in the year when sustained. The book entry is not controlling. Cf. ; . Respondent's action on this issue is approved.
Petitioner assails respondent's action in failing to allow as deductions from gross income for the taxable year the amounts of $11,110 invested in capital stock of the Triangle Agricultural Corporation, and $2,993.39 and $8,980.28 representing loans to that corporation and to C. C. Smith, its president. The facts are fully set out hereinabove, and in our opinion definitely preclude the relief sought by petitioner.
It is shown*1121 that the business of this corporation was discontinued about April 1929, at which time it was hopelessly insolvent and unable to pay its debts. The circumstances existing at that time, we think, would have caused any reasonably prudent business man to conclude that the stock in the Triangle Corporation was worthless, as well as any debts owing by it. True, it owned a small amount of assets which were sold in 1932 for $2,250, but the corporation's indebtedness, including stock subscriptions, amounted to approximately $35,000. There is no evidence to show that Smith personally was in a position to meet his obligations or had assets which would have given value thereto.
The statute contemplates the deduction from gross income of losses which are fixed by identifiable events, such as the sale of property or its destruction or injury, or "in the case of debts, by the occurrence of such events as preclude their collection." However, "the taxing act does not require the taxpayer to be an incorrigible optimist." .
On October 16, 1930, Smith wrote a letter to James H. Post, petitioner's sole stockholder, *1122 in which he promised personally to pay the indebtedness of the Triangle Corporation, including all stock subscriptions, and expressed the hope that in the following year, he would be able to begin "paying you part of the moneys you so generously advanced." There is nothing in the evidence to indicate what, if anything, this promise was worth, but if it was regarded by Post as worthless, then both petitioner's investment in Triangle stock and the loans made to that corporation and to Smith became *1172 valueless not later than the taxable year 1929; but on the other hand if the situation was such that Post might reasonably have relied on Smith's promise, then petitioner's investment and loans did not become worthless until sometime subsequent to the taxable year 1930. Whatever may be the true facts, there is no evidence before us to establish that any identifiable event occurred in the taxable year to fix the incidence of loss in respect of the deductions claimed. The burden of proof is on petitioner, and, for failure to meet such burden, respondent's determination must be, and is, approved. *1123 .
The remaining deduction disallowed by respondent involves wash sales of 200 shares of National City Bank stock. One hundred shares each were sold on August 8 and August 11, 1930, and petitioner thereafter purchased 200 shares of the same stock within 30 days, that is, on September 2, 1930.
Petitioner sold other shares of National City Bank stock on August 11 and August 12, sustaining a total loss of $13,465.70, which amount it claimed as a deduction in its 1930 income tax return. Respondent disallowed the losses sustained on the first two sales in the aggregate amount of $7,351.60, under the wash sales provisions of section 118 of the Revenue Act of 1928. Petitioner assigned error, but on brief made no reference to the issue thus raised.
Apparently petitioner has abandoned the issue, but in any event we approve respondent's action, which is plainly in accordance with the provisions of the statute. .
Decision will be entered for respondent.