*3694 The Commissioner's determination of petitioner's invested capital for the years in question is approved.
*888 This proceeding is for the redetermination of deficiencies in income and profits taxes for the fiscal years ended March 31, 1918, and March 31, 1919, in the amounts of $257.11 and $501.23, respectively. *889 The petitioner alleges that in determining the deficiencies, the Commissioner erred in failing to permit it to include in invested capital the value of intangible assets acquired by it on April 1, 1917, in exchange for stock. The proceeding was submitted on the pleadings.
FINDINGS OF FACT.
The petitioner is an Illinois corporation with its principal office at Mendota, in that State. It is and was during the years in question engaged in business as a wholesale distributor of coal, tile, brick, and building materials.
Petitioner was organized on April 1, 1917, with an authorized capital stock of $100,000, for the purpose of acquiring the business theretofore conducted by H. D. Conkey.
On or after April 1, 1917, H. D. Conkey, *3695 in exchange for substantially all of petitioner's capital stock, transferred to it all of the assets, tangible and intangible, of the business formerly conducted by him as an individual. Conkey, in acquiring the intangible assets which he transferred to petitioner, had not expended anything therefor and such intangible assets as were transferred had grown up with his business.
The Commissioner, in determining the deficiencies for the years in question, refused to permit the petitioner to include in invested capital any amount on account of the intangibles acquired on April 1, 1917, in exchange for stock.
OPINION.
LOVE: It is not necessary for us to discuss the various contentions advanced by the petitioner. It will be sufficient to observe that the intangibles in question were acquired by Conkey without any expenditure therefor and that there is no evidence as to their value, if any, at the time of transfer to petitioner. Section 331, Revenue Act of 1918. Obviously, therefore, the Commissioner's action in refusing to permit the inclusion in invested capital of any amount on account thereof must be approved.
Judgment will be entered for the respondent.