*378 Before GRAUPNER, TRAMMELL, and PHILLIPS.
This is an appeal from deficiencies in income and profits taxes for the calendar year 1919 and 1920, in the respective amounts of *379 $440.76 and $1,764.62, a total deficiency of $2,205.38. This deficiency is the result of elimination from invested capital of an item claimed as representing good will. The petition also alleges error on the part of the Commissioner for failure to compute tax under sections 327 and 328 of the Revenue Act of 1918. No evidence was offered in support of the claim for assessment under section 328 and this allegation of error will not be further considered. At the hearing a stipulation of facts was read into the record and oral testimony was offered on behalf of the taxpayer.
FINDINGS OF FACT.
1. The taxpayer is an Oregon corporation organized March 1, 1919, with its principal office at Portland.
2. Upon incorporation the taxpayer issued $100,000 par value of capital stock divided into shares having a par value of $100 each. Of*2432 the capital stock issued all but two qualifying shares were issued to Herman Enke, who was the sole proprietor of a business of the same name as that of the taxpayer in this case.
3. On April 25, 1919, the assets of the sole proprietorship were transferred to the taxpayer by a duly executed bill of sale.
4. The depreciated cost of the tangible assets turned over to the corporation was $77,014.41. To balance its asset accounts with its capital stock account the taxpayer set up on its books an item of good will in the amount of $22,985.59. This item represented good will and trade-marks which had been created through successful operation by Enke during a period of approximately thirty years.
5. In auditing the taxpayer's income-tax returns the Commissioner disallowed the amount of $22,985.59 as a part of invested capital for the years here involved.
DECISION.
The determination of the Commissioner is approved.
OPINION.
GRAUPNER: In this appeal it is clear that there was a change of ownership after March 3, 1917, and it is equally clear that an interest or control of fifty per cent or more remained in the owner of the predecessor business. The provisions of section*2433 331 of the Revenue Act of 1918 are therefore applicable, and, under this section, the taxpayer is not entitled to include the claimed item of good will in its invested capital.