*1720 1. Value of good will owned by petitioner on March 1, 1913, recognized and determined.
2. The evidence in this case fails to establish the fact that petitioner parted with any of its good will in a sale of a part of its business in 1920, or that the purchaser acquired any part of such good will.
*1335 This proceeding is for the redetermination of a deficiency in income and profits tax for the fiscal year ended March 31, 1921, in the amount of $8,454.69.
At the hearing, petitioner waived its assignment of error with respect to special assessment.
Petitioner alleged that in selling a part of its business on April 28, 1920, it sold a part of its good will asset possessed by it on March 1, 1913, and all the evidence offered was with respect to the value of such good will on March 1, 1913.
The issue of whether or not any part of such good will was transferred to the purchaser in 1920 is inherent in the pleading and the evidence, and the case turns on that point.
FINDINGS OF FACT.
Petitioner is, and was in the taxable year, a corporation organized*1721 under the laws of Missouri, with its principal office in the city of St. Louis.
Its business is that of coal and coke merchant. Prior to April 28, 1920, it operated both a retail business and a wholesale business. On the last date mentioned it sold its retail business for a consideration of $36,510 in cash, and retained its wholesale business. It is agreed by and between petitioner and respondent, and we so find, that the value of the physical assets sold was $2,143.17.
*1336 The Commissioner determined that the difference between the sale price and the value of the physical assets, viz., $34,366.83, was realized profit, and by reason of the fact that no part of that amount was included as income in the return for the taxable year, determined the deficiency.
The corporation was in existence prior to 1900 and prior to 1909 it was under the name of Devoy & Fuerborn Coal & Coke Company. In 1909 Devoy and Kuhn purchased all the stock of the company, including the stock of Fuerborn, and Fuerborn retired from the company and the company's name was changed to Deveoy and Kuhn Coal and Coke Company. At the date of the hearing of this proceeding, Devoy and Kuhn both were*1722 deceased.
At all times prior to the sale in 1920 the company operated a retail (that is, a wagonload) business, and a wholesale (that is, a carload) business. It sold only its retail business. Petitioner specialized in high grade and high priced coal, and catered to the more cautious, discriminating customers, and established a reputation for its "Economy Coal," which was its recognized trade-mark.
The following tabulated statement shows the volume of its business, as well as the trend of its business for the years therein designated:
| Recapitulation of sales showing wagon load (retail sales) and wholesale sales | |||
| Period ended March 31 | Wagon load (retail) | Carload (wholesale) | Total sales |
| 1912 (6 mos.) | $337,377.87 | $709,386.29 | $1,046,764.16 |
| 1913 (12 mos.) | 505,416.91 | 968,872.99 | 1,474,289.90 |
| 1914 (12 mos.) | 466,101.97 | 900,731.93 | 1,366,833.90 |
| 1915 (12 mos.) | 316,740.37 | 783,223.79 | 1,099,964.16 |
| 1916 (12 mos.) | 292,909.00 | 886,253.80 | 1,179,162.80 |
| 1917 (12 mos.) | 359,102.45 | 1,547,171.69 | 1,906,274.14 |
| 1918 (12 mos.) | 273,126.23 | 2,058,522.31 | 2,331,648.54 |
| 1919 (12 mos.) | 240,525.77 | 2,028,178.83 | 2,268,704.60 |
| 1920 (12 mos.) | 245,522.30 | 2,297,037.95 | 2,542,560.25 |
| Grand total | 3,036,822.87 | 12,179,379.58 | 15,216,202.45 |
| Recapitulation of tonnage sales | |||||
| Period ended March 31 | Total tonnage sold | Tons | Wagon load, per cent of total | Tons | Carload, per cent of total |
| 1915 (7 mos.) | 540,051 | 84,720 | 15.7 | 455,331 | 84.3 |
| 1916 (12 mos.) | 833,645 | 109,348 | 13.1 | 724,297 | 86.9 |
| 1917 (12 mos.) | 1,122,594 | 124,748 | 11.1 | 997,846 | 88.9 |
| 1918 (12 mos.) | 1,084,491 | 51,374 | 4.7 | 1,033,117 | 95.3 |
| 1919 (12 mos.) | 954,544 | 40,895 | 4.3 | 913,649 | 95.7 |
| 1920 (12 mos.) | 1,040,493 | 41,865 | 4.0 | 998,628 | 96.0 |
From the facts in the record, we find that on March 1, 1913, petitioner, under the name of Devoy and Kuhn Coal and Coke Company, was selling at retail and wholesale a superior coal designated by the *1337 company as "Economy Coal," which at that date had acquired a reputation and was popular among coal users in the area served by petitioner; that the favorable reputation of the Devoy and Kuhn Coal and Coke Company, and the favorable reputation of "Economy Coal," constituted a good will asset in the hands of the company, and that the value of such good will asset, allocable to the retail part of the company's business was not less than $34,366.83.
OPINION.
LOVE: The*1724 evidence in the record clearly shows that petitioner was engaged in the business of wholesale and retail merchants of coal and coke on March 1, 1913, and for a number of years prior thereto. The evidence also shows that in such business petitioner had, on March 1, 1913, a valuable good will asset.
It is admitted and we have so found that on April 28, 1920, petitioner sold its retail business for $36,510, and that the tangible assets sold in that deal had a value at that date of $2,143.17. The difficulty we encounter is to ascertain and determine what petitioner sold, and what the purchaser bought in that deal. Did the purchaser only eliminate a formidable competitor? There is no evidence to indicate whether or not the purchaser operated the retail business, after the deal, from the same yard or stand; whether or not it acquired the right to use and did use the name of Devoy and Kuhn Coal and Coke Company, or that it acquired the right to use the trade-mark, "Economy Coal"; nor is there any evidence that a list of old patrons was furnished the purchaser. The record is ominously silent on what was included in the deal. The contract of sale and purchase is not before us.
*1725 It is clearly evidenced by the record that petitioner continued in the wholesale part of its business after the deal. The record therefore indicates that the purchaser accomplished nothing and got nothing by the deal (other than a small amount of physical assets) except to eliminate a competitor. Elimination of a competitor is not equivalent to acquisition of good will, as that term is used in questions of the kind we now have under consideration. See ; .
Neither does the sale and simple cessation of one branch of a business, while the other branches are still carried on with all the benefits of its recognized good will unimpaired, constitute a sale of good will, unless in such sale of the part, all, or at least some, of the vital elements constituting good will, as that term is understood and used, are included in the sale and pass to the purchaser for his use and benefit.
Judgment will be entered for the respondent.