*2562 On the facts, held that the petitioners herein were not affiliated during the years 1920 and 1921.
*586 These proceedings were consolidated for hearing and disposition. As to the North American Service Co., the Commissioner determined a deficiency for the calendar year 1920 of $3,086.76 and an over-assessment for the calendar year 1921 of $2,218.71, and as to the Interstate Highways Service Co., he determined a deficiency for the calendar year 1921 of $1,346.99.
The sole issue presented is whether the petitioners were affiliated during the years 1920 and 1921.
FINDINGS OF FACT.
The North American Service Co. was organized in 1919 under the laws of Illinois, with an authorized capital stock of $7,000 divided into 70 shares of the par value of $100 each. In April, 1921, the authorized capital was increased to $30,000, divided into 300 shares.
The Interstate Highways Service Co. was organized on March 29, 1920, under the laws of Illinois, with an authorized capital stock of $22,700 divided into 454 shares of the par value of $50 each.
*2563 *587 The petitioners were engaged in the business of manufacturing, selling, erecting, and maintaining highway advertising signs. They occupied the same offices and the business of each petitioner was conducted by the same officers. An accurate account of income received and expenses incurred with respect to each petitioner was not maintained.
During the years 1920 and 1921 the stock ownership of the petitioners was as follows:
| North American Service Co. | |||
| Shares held | |||
| Jan. 1, 1920 | Apr. 1, 1921 | Dec. 31, 1921 | |
| D. A. Brumbaugh | 68 | 292 1/2 | 292 1/2 |
| Miscellaneous | 2 | 7 1/2 | 7 1/2 |
| Total shares | 70 | 300 | 300 |
The stock under the heading "Miscellaneous" was held by Mrs. Brumbaugh and employees named as directors.
| Interstate Highways Service Co. | |||
| Shares held | |||
| Mar. 29, 1920 | Dec. 27, 1920 | Dec. 31, 1921 | |
| D. A. Brumbaugh | 255 | 255 | 255 |
| F. I. Brumbaugh (wife) | 197 | 197 | 197 |
| E. M. Plath (employee) | 2 | ||
| Rose Fawcett (employee) | 2 | 2 | |
| Total shares | 454 | 454 | 454 |
D. A. Brumbaugh was the president of both petitioners and was the manager of their affairs.
On March 30, 1920, immediately after the organization*2564 of the Interstate Highways Service Co., the certificates for 197 shares of stock therein issued to and standing in the name of F. I. Brumbaugh were endorsed by her and assigned to A. E. Duncan. The certificates so endorsed and assigned were immediately delivered to Duncan who held them until shares of stock were reissued in his name subsequent to December 31, 1921. However, at any time while he, Duncan, held the certificates for the 197 shares of stock, he could have demanded a reissuance of the stock in his own name.
A. E. Duncan was chairman of the board of directors of the Commercial Credit Co. of Baltimore, Md., and had furnished the entire capitalization of the Interstate Highways Service Co. *588 Duncan did not have the stock issued in his own name for the reason that he was fearful of action that the company might take.
Upon audit of the returns for the years in question, the Commissioner determined that the petitioners were not affiliated.
OPINION.
LOVE: We do not deem it necessary to enter into an extended discussion of the issue herein presented.
It is an established fact that for personal reasons A. E. Duncan, at the time of the organization of the*2565 Interstate Highways Service Co. did not want any stock issued in his name, and on account thereof 197 shares were issued to Mrs. F. I. Brumbaugh, the certificates for all of which were immediately endorsed, assigned, and delivered to Duncan who, it is clear, could cause at any time the reissuance of the shares in his name.
We are of the opinion, therefore, that Duncan exercised complete dominion and control over approximately 43 per cent of the stock of the Interstate Highways Service Co., and we are of the further opinion that by reason of this divergence in interest and control of the stock of the petitioners the Commissioner was correct in denying affiliation thereto.
Judgment will be entered for the respondent.
Considered by TRUSSELL, SMITH, and LITTLETON.