*2041 Held that the respondent has failed to sustain the burden of proof to show that the petitioner is liable as the transferee of property of the taxpayer.
*721 Under section 280 of the Revenue Act of 1926 the respondent has proposed for assessment against the petitioner as transferee of the assets of the Western Holding Co., Inc., of New York, N.Y., a deficiency in income tax of that company in the amount of $18,536.45 for 1922. The only question involved in this proceeding is the petitioner's liability as transferee for the payment of the deficiency.
*722 FINDINGS OF FACT.
The Western Holding Co. was organized about 1914 with a capital stock of $10,000, divided into 100 shares of a par value of $100 each. Upon the completion of organization 50 shares of the stock were issued to the petitioner and 50 shares to her husband, Franklin Haines. At some time after the receipt of the shares by the petitioner she endorsed them in blank.
In 1910 Franklin Haines suffered serious financial reverses which culminated in bankruptcy proceedings*2042 and, as a result, was divested of all of the property he had at that time. The petitioner had certain property of her own and there was certain property which she would inherit upon the death of her mother. The petitioner borrowed against what would be her inheritance in order to obtain money which she loaned to her husband to buy real estate and otherwise carry on his real estate operations. The petitioner's practice of loaning money to her husband to carry on his real estate operations was continued until quite recently.
The business of the Western Holding Co. consisted of operating an apartment house at 166 West 72nd Street, New York City. This property, which was all the real estate the company had, was acquired by it in 1914. To enable the corporation to acquire the property the petitioner on May 15, 1914, paid $16,000 of the purchase price from her own funds. Thereafter from time to time down to February 26, 1921, she made additional loans from her own funds to the corporation for operating expenses in the total amount of $28,603.33. Of the above mentioned loans totaling $44,603.33 repayments were made from time to time so that at June 30, 1922, the corporation was*2043 indebted to the petitioner in the amount of $29,502.40, which amount is still outstanding and unpaid.
During 1922 and at some time prior to June 30 of that year the corporation sold its property at 166 West 72nd Street. At June 30, 1922, the corporation had assets totaling $80,605.90, of which $32,192.33 represented an indebtedness owing to it by Franklin Haines, the petitioner's husband. On that date the corporation's liabilities amounted to $44,800.84, including the indebtedness of $29,502.40 owing by it to the petitioner. The corporation's surplus on June 30, 1922, was $25,805.06. Although the corporation had assets in the amount set forth above, the petitioner, after the sale of the corporation's property at 166 West 72nd Street, never received anything from either the corporation or her husband, who handled the sale. The petitioner has sustained heavy losses as a result of the loans made by her to the Western Holding Co. and other corporations which her husband operated.
*723 OPINION.
TRAMMELL: The petitioner contends that she is not liable, as a transferee of the property of the Western Holding Co., for the deficiency in tax of that company which the respondent*2044 proposes to assess against her.
Section 602 of the Revenue Act of 1928 provides in part as follows:
Title IX of the Revenue Act of 1924, as amended, is further amended by adding at the end thereof two new sections to read as follows:
"TRANSFEREE PROCEEDINGS
"SEC. 912. In proceedings before the Board the burden of proof shall be upon the Commissioner to show that a petitioner is liable as a transferee of property of a taxpayer, but not to show that the taxpayer was liable for the tax."
The evidence shows that from May 15, 1914, until February 26, 1921, the petitioner loaned various sums of money to the Western Holding Co., the total of which amounted to $44,603.33, and that the amounts paid to her were only sufficient to reduce this total to $29,502.40, which amount is still owing to the petitioner. From the record it appears that the petitioner at no time received any more from the corporation than partial payment of its indebtedness to her, having no relation to any stockholder relationship, nor is there any evidence that the corporation paid over or distributed anything to the petitioner after the sale of its assets, or that the corporation was insolvent and without*2045 assets sufficient to pay the deficiency. The evidence of record is not sufficient to meet the burden of proof on the respondent to show the liability of the petitioner as transferee, conceding for the sake of argument that she was a stockholder of the corporation. Cf. .
Judgment will be entered for the petitioner.