no other interest in these three organizations. Neither of them owned shares in H. and L. Epstein, Inc. Consequently they can not be considered as the same interests as the seven owners of the stock of that company and for the same reason can not themselves be considered jointly as the same interests in respect to ownership of the two trusts in question. Handy & Harman v. Burnet, supra; Crossett Western Co., 27 B. T. A. 258. It necessarily follows that there was no statutory affiliation between these companies predicated upon ownership of 95 per cent of their voting stock by the same interests for the period February 6 to December 30, 1924.

Petitioners contend, however, that affiliation existed during the period February 6 to December 31, 1924, because it is shown that during that period H. and L. Epstein, Inc., owned more than 95 per cent of the voting stock of the two trusts by reason of its ownership of 970 shares or 96 per cent of the combined 1,000 shares of the two. It is urged that this shows a 96 per cent ownership of the voting stock of the two and complies with the statutory requirements.

We do not agree with this construction and application of section 240 (c). The purpose of Congress in this section was to tax the income resulting from the conduct of what was in effect a single business enterprise, as that of a business unit, even though conducted by means of several corporations. The report of the Senate Finance Committee, to which had been referred the Revenue Act of 1918, in discussingsection 240 thereof, which, in all respects pertinent to the question presented here, is identical with section 240 of the Revenue Act of 1924, states:

The purpose of section 240 was, by means of consolidated returns, to require taxes to be levied according to the true net income and invested capital resulting from and employed in a single business enterprise, even though it was conducted by means of more than one corporation. [Senate Documents, Vol. 4, Doc. 310, 65 Cong. 3d Sess.]

The purpose and intent as stated above has been recognized by respondent and also by Congress in enactment of subsequent income tax legislation. Regulations 41, art. 77; section 1331 (a), Revenue Act of 1921; sections 240 (b) and 336 of House Bill 12863 (40 Stat. 1081 and 1096). Regulations 45 (1920 Ed.) arts. 631, 633. Cf. Handy & Harman v. Burnet, supra.

In the last cited case the court also recognized that the ownership required of two or more corporations by the parent company as the basis for affiliation is an ownership in each to the extent set out in the section. On that question the court said:

It requires no discussion to show that such returns will not make against inequality or evasion unless the same interests are the beneficial owners in like proportions of substantially all the stock of each of such corporations.

Petitioner's theory would permit a corporation owning all of the voting stock of a 100,000 share corporation to acquire affiliation with a corporation of 5,000 voting shares by the purchase of only one share of the latter's stock. In that case, although it would then own more than 95 per cent of the combined voting shares of the two, to allow affiliation under such conditions would defeat the purpose of the quoted section. Accordingly, we refuse to give such meaning where the construction applied by respondent gives effect to the legislative intent.

We hold that the action of respondent, to the extent to which he denied affiliation, is correct with the one exception that affiliation of the three organizations existed for one day of the taxable period, to wit, December 31. Respondent agrees that his determination should be adjusted to that extent.

The appeal under Docket No. 44267 is by H. and L. Epstein, Inc., from the deficiency determined against it and that under Docket No. 44268 is by the Army and Navy Store Trust from the deficiencies determined as heretofore set out. By these two proceedings are presented every issue raised by these petitioners upon the deficiencies asserted. Under Docket No. 44267 these two individual petitioners have attempted to appeal jointly from the several deficiencies asserted against them individually and covered by their two separate appeals. A motion by respondent to dismiss the appeal under Docket No. 44269 as improperly joining two separate appeals and as covering issues upon which appeals were already pending before this Board, was taken under advisement at the hearing. This motion is now granted.

An order of dismissal will be entered in Docket No. 44269. In Docket Nos. 44267 and 44268 judgment will be entered under Rule 50.

FLORENCE A. STEPHENSON, TRustee, Estate of Thomas JEFFERSON STEPHENSON, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 42382. Promulgated February 28, 1933.

The value of property owned by the decedent and his wife as joint tenants is includable in his gross estate even though the joint tenancies were created prior to the passage of the first estate tax law, Revenue Act of 1916.

George Clark, Esq., and Ralph R. Eltse, Esq., for the petitioner. C. A. Ray, Esq., for the respondent.

OPINION.

SMITH: This is a proceeding for the redetermination of a deficiency in estate tax of $798.36. The respondent duly asserted claim to the increased deficiency that will result from including in the decedent's gross estate certain jointly owned property of the value of $7,500, which he asserts was erroneously excluded in determining the deficiency. The sole question in issue is whether the value of property owned by the decedent and his wife as joint tenants has been properly included in his gross estate.

The petitioner is the widow of Thomas Jefferson Stephenson, who died a resident of California, December 25, 1923. She filed an estate tax return for the estate of the decedent in which she reported a gross estate consisting entirely of jointly owned property of $123,242.91. From the gross estate was deducted funeral expenses, $700; attorneys' fees, $125; and specific exemption, $50,000, leaving a net estate of $72,417.91. In making such return the petitioner did not concede that there was any net estate subject to a Federal estate tax. The respondent determined that there was erroneously included in the gross estate $7,500 representing jointly owned property, the joint tenancy having been created in 1910, and determined that the net estate subject to tax was $64,917.91, upon which he determined a deficiency in estate tax of $798.36. By an amended answer the respondent contends that he was in error in excluding from the gross estate the jointly owned property in the amount of $7,500, above referred to, and now has moved to increase the deficiency by such erroneous exclusion from the gross estate.

Several of the joint tenancies were created long prior to 1916. In this proceeding the petitioner contends that where the joint tenancies were created prior to 1916 and prior to the time when there was any Federal estate tax, the value of the interest of the decedent in such joint estate at the date of his death may not be included in the gross estate.

Section 402 of the Revenue Act of 1921 provides in part as follows:

That the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated

(d) To the extent of the interest therein held jointly or as tenants in the entirety by the decedent and any other person, or deposited in banks or other institutions in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than a fair consideration in money or money's worth: Provided, That where such property or any part thereof, or part of the consideration with which such property was acquired, is shown to have been at any time

acquired by such other person from the decedent for less than a fair consideration in money or money's worth, there shall be excepted only such part of the value of such property as is proportionate to the consideration furnished by such other person: Provided further, That where any property has been acquired by gift, bequest, devise, or inheritance, as a tenancy in the entirety by the decedent and spouse, or where so acquired by the decedent and any other person as joint tenants and their interests are not otherwise specified or fixed by law, then to the extent of one-half of the value thereof.

The record before us does not show that the petitioner contributed anything to the acquisition of the jointly owned property.

In Gwinn v. Commissioner, 287 U. S. 224, it was held that the gross estate of a California decedent who died October 5, 1924, should include one-half of the value of property held by decedent and her son as joint tenants since 1915, each having contributed equal amounts to the purchase of the property. The court said:

The clear language of the 1924 statute repels the notion that it has no application to joint tenancies created prior to September 8, 1916.

* The death became the generating source of definite accessions to survivor's property rights. The observation of the Supreme Court is equally applicable to the estate of a decedent dying in 1923, the pertinent language of the Revenue Act of 1921 not being substantially different from that of the Revenue Act of 1924 bearing upon the question involved.

It is further to be noted that in Third National Bank & Trust Co. of Springfield v. White, 45 Fed. (2d) 911, it was held that the value of the entire property held in tenancy by the entirety was subject to estate tax though the transfer was completed before the statute imposing the tax was enacted. There the tenancy by the entirety was created in 1915. This decision of the District Court was affirmed by the Circuit Court of Appeals for the First Circuit, 58 Fed. (2d) 1085, and by the Supreme Court, without opinion, on December 19, 1932.

From the above mentioned decisions there can be no question that the interest of the decedent in jointly owned property is includable in the gross estate of a decedent dying in 1923, even though that interest was acquired long prior to the effective date of the act. There being no proof that any part of the property held by the decedent and his wife as joint tenants originally belonged to the petitioner, or that it was acquired by her from the decedent for a fair consideration in money or money's worth, the action of the respondent in including all of such jointly owned property in the decedent's gross estate is sustained. The deficiency should be recomputed accordingly.

Judgment will be entered under Rule 50.

GREY BULL CORPORATION, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 47376. Promulgated March 7, 1933.

A corporation, operating under a separate contract with each of its shareholders, to graze and market the shareholders' livestock without taking title and divide among them the net proceeds in proportion to the number of livestock contributed by each, which makes such distribution pursuant to such contracts, held to have no net taxable income from such operations.

John W. Drye, Jr., Esq., for the petitioner.

L. W. Creason, Esq., for the respondent.

Respondent determined deficiencies in petitioner's income taxes for the fiscal years ended October 31, as follows: 1924, $2,191.69; 1925, $1,396.24; 1926, $9,502.02; 1927, $15,950.41.

Petitioner contends that it is tax-exempt as a cooperative corporation under section 231 (11), Act of 1924, and section 231 (12), Act of 1926, and, failing that, that it had no income, acting merely as agent for its shareholders. A third error, assigned in the alternative, relates to the computation of income from its operations.

FINDINGS OF FACT.

The petitioner is a corporation of the State of Wyoming, with its office and place of business at Cody. It was organized in April, 1920, by W. R. Coe, L. G. Phelps, and E. V. Robertson, for a term of fifty years, with an authorized capital stock of $250,000, consisting of 2,500 shares of common stock of the par value of $100 per share. The objects and purposes of the corporation, as set forth in its articles of incorporation, are as follows:

to engage in a general live-stock, farming and ranching business, both on its own account and as agent; to agist, feed, range, graze, manage, herd, control, brand, care for, purchase, market and sell live-stock of every kind, both on its own account and as agent for other persons or corporations; to buy, lease, cultivate, manage, operate and sell farm and ranch properties and products therefrom both on its own account and as agent for other persons or corporations; and in the carrying on of its general line of business it shall have power to acquire, by purchase, lease and contract, or otherwise, and to dispose of lands, live-stock, water rights, ditches and farm and ranch property of all kinds, both on its own account and for its own benefit and as agent for other persons and corporations; to borrow money and to issue bonds, notes or other evidences of indebtedness in such form and at such times and in such installments as shall be determined by the corporation and for the purpose of securing the payment of such indebtedness to mortgage, pledge or hypothecate all or any part of the property of the corporation, and generally to do all things necessary or incident to carrying on any of the business and purposes of the corporation as herein set forth.