*2536 Where all the material allegations of the petition are denied by the answer, and the petitioner offers no evidence in support of its allegations, the determination of the respondent is approved.
*663 This is a proceeding for the redetermination of a deficiency of $1,253.45 in income and profits taxes for the year 1921. It is alleged that the Commissioner erred (1) by excluding from invested capital one-fourth of the value of patents, trade-marks and good will paid in for capital stock, and (2) by refusing to allow as a deduction a *664 proportionate part of the discount at which petitioner sold its preferred stock, redeemable at par within a specified time. The appeal is submitted upon the pleadings, from which we make the following
FINDINGS OF FACT.
The petitioner is a New York corporation with its principal office in Brooklyn.
Petitioner was the owner of patents, trade-marks and good will for which it issued capital stock of the par value of $45,000.
Petitioner issued its preferred stock at a discount of $21,610.
OPINION.
*2537 VAN FOSSAN: The petitioner alleged that it acquired patents, trade-marks and good will of the value of $45,000 for capital stock, and that one-fourth thereof, $11,250, is allowable as invested capital. The respondent denied that the patents, trade-marks and good will acquired for capital stock had any value at the time of acquisition. No proof of the value of these intangibles having been offered by the petitioner, we must hold that the respondent did not err in excluding the same from invested capital. Intangibles may not be included as a part of invested capital in excess of their actual cash value at the time bona fide paid in for stock, and are subject to the limitations contained in section 326(a)(4) and (5), Revenue Act of 1921.
The petitioner further alleges that it sold preferred stock at a discount of $21,610, which it was obligated to retire by 1930, and that a proportionate part thereof, $2,161, is deductible from its income for the taxable year as expense. The respondent denied that the petitioner was obligated to retire its preferred stock by 1930, and petitioner offered no proof in support of its allegation. On this issue, also, petitioner fails to establish*2538 error.
Judgment will be entered for the respondent.
Considered by MARQUETTE and PHILLIPS.