*633 Before GRAUPNER, TRAMMELL, and PHILLIPS.
This appeal is taken from determinations of deficiencies in income tax for the calendar years 1919 and 1920 in the respective amounts of $165.02 and $297.11, a total deficiency of $462.13. This deficiency arises from the disallowance by the Commissioner of payments made to certain annuitants and claimed as a deduction by the taxpayer in its income-tax returns.
*634 FINDINGS OF FACT.
1. The taxpayer is a California corporation with its principal place of business at San Francisco.
2. On March 21, 1907, James Denman by deed conveyed three prieces of real estate is San Francisco to his wife, Helen Virginia Denman, and his two children, William Denman and Mary Warren Cheatham. By the terms of this conveyance the grantees held the property as tenants in common.
3. Under date of March 9, 1909, the taxpayer, as party of the first part, entered into an agreement with Helen V. Denman, Mary Warren Cheatham, and William Denman, as parties of the second part, whereby the parties of the second*2321 part agreed to convey to the taxpayer the property which had been deeded to them by James Denman, and the taxpayer agreed to issue each of the parties of the second part 99,999 shares of its capital stock and to pay over to Helen V. Denman five-twelfths of the net income of the property, which was to be computed in the manner set forth in the agreement. Under this agreement the taxpayer also agreed to pay to Martin Denman, brother of James Denman, the sum of $15 per month during his natural life and to Frances Cassidy, sister of James Denman, the sum of $25 per month during her natural life, the payments to both of these persons to be made upon the condition that they assign to the taxpayer all right and interest to any money, income, or property acquired by any will of James Denman, who at the time of the execution of this agreement was deceased.
4. At the time this agreement was executed Helen V. Denman was 67 years of age. The American mortality tables show a person of this age to have an expectancy of life of 10 years.
5. The terms of the agreement of March 9, 1909, relative to the conveyance of the property and the issuance of capital stock were carried out and Helen*2322 V. Denman, Mary Warren Cheatham, and William Denman each received 99,999 shares of a total issue of 300,000 shares.
6. In accordance with this agreement the taxpayer made the following payments:
| 1919 | 1920 | |
| Helen V. Denman | $3,718.00 | $4,491.04 |
| Martin Denman | 180.00 | 180.00 |
| Frances Cassidy | 300.00 | 300.00 |
| Total | 4,198.00 | 4.971.04 |
These payments were claimed by the taxpayer as deductions from gross income for the years 1919 and 1920. The Commissioner disallowed *635 the claimed deductions which resulted in the deficiency here involved.
DECISION.
The determinations of the Commissioner are approved.
ARUNDELL not participating.