*1165 Before MARQUETTE and MORRIS.
This is an appeal from the determination of a deficiency in income and profits taxes for the year 1919 in the amount of $1,029.12.
The question is whether the taxpayer was affiliated during 1919 with the West Branch Light & Power Co.
FINDINGS OF FACT.
The taxpayer and the West Branch Light & Power Co. are New York corporations, engaged in the business of generating and distributing electricity for light and power purposes.
*1166 During the year 1919 the stock in both companies was owned as follows:
| Taxpayer | West Branch Light & Power Co. | |
| Shares | Shares | |
| John P. Grant | 166 | 35 |
| Carrie Grant (his wife) | 1 | 2 |
| Helen P. Grant Taylor (their daughter) | 2 | 13 |
| Total stock outstanding | 169 | 50 |
All the stock was voted by John P. Grant, who was the president and treasurer of both companies. In each company the wife was vice president and the daughter secretary. The same person served as superintendent of both companies.
The West Branch Light & Power Co. was organized in 1906 to serve the*2139 community about Stanford, N.Y., with electricity for light. It gave a night-time service for six years. The hydroelectric development at its location was inadequate to supply day-time service for power. In 1912 it was decided to increase the facilities but, as there was already an existing bond issue for $50,000 secured by mortgage, the bonds not coming due until 1926, after conference with the New York Public Service Commission, it was determined to organize a new company which would acquire another location for hydroelectric development and supply the electricity to the West Branch Light & Power Co.
The taxpayer was organized in 1912 to perform that service. All of its capital stock was paid for by John P. Grant, who gave to his wife, son, and daughter shares to qualify them as directors. The son was killed in an automobile accident in 1914 and his stock came to the daughter. Practically all of the electricity generated by the taxpayer during 1919 was sold to the West Branch Light & Power Co.
The taxpayer and the West Branch Light & Power Co. were affiliated corporation during the year 1919.
DECISION.
The deficiency, if any, should be computed on the basis of a consolidated*2140 return for the two companies. Final determination will be settled on 7 days' notice, under Rule 50.