Case Name: Appeal of HAMILTON & CHAMBERS CO., INC.
Court: United States Board of Tax Appeals
Jurisdiction: United States
Decision Date: 1925-02-28
Citations: 1 B.T.A. 694
Docket Number: Docket No. 131
Parties: Appeal of HAMILTON & CHAMBERS CO., INC.
Judges: Before James, Sternhagen, TRAmmell, and Trussell.
Reporter: Reports of the United States Board of Tax Appeals
Volume: 1
Pages: 694–697

Head Matter:
Appeal of HAMILTON & CHAMBERS CO., INC.
Docket No. 131.
Submitted January 24, 1925;
decided February 28, 1925.
George H. Mitchell, Esq., for the taxpayer.
P. 8. Crewe, Esq. (Nelson T. Hartson, Solicitor of Internal Revenue) for the Commissioner.
Before James, Sternhagen, TRAmmell, and Trussell.

Opinion:
OPINION.
Trussell :
The one issue requiring consideration in the determination of this appeal is whether, during that portion of the year 1919 following its organization, the Fougner Concrete Steel Co. was affiliated with the Hamilton & Chambers Co. within the meaning and purpose of section 240 of the Revenue Act of 1918.
The principal actors in the transactions which brought about the situation involved in this appeal were John W. Hamilton, then president of the Hamilton & Chambers Co., and Hermann Fougner. Hamilton died in the spring of 1924. Fougner was present at the hearing and testified concerning his conversations and negotiations with Hamilton.
These negotiations resulted in the determination of Hamilton & Chambers Co. to extend the field of its business activities by the addition of a new unit and the taking of Fougner into the organization as a new associate. The evidence establishes that thereafter, throughout the year 1919, all the business of the Hamilton & Chambers Co. and all its associated corporations, including the Fougner Concrete Steel Co., were conducted and managed as a single business enterprise; that when Fougner entered this organization he entered it upon substantially the same basis and with the same relationships as had previously obtained among its other stockholders; that he was just as much a part of one unified system of organization as were the other stockholders; that his interest in the entire group of enterprises differed in no essential respect from the interests of other stockholders", and that in his separate ownership of 30 shares of the stock of the Fougner Concrete Steel Co. he was, and continued through the year 1919 to be, in the position and relation of a " closely aifiliated interest " through which the taxpayer controlled all of that portion of the stock of the Fougner Company not directly owned by it.
We believe the record of this appeal shows a situation which must lead irresistibly to the conclusion that the relations existing between the taxpayer and the Fougner Concrete Steel Co. were such as were intended to be described and defined in section 240 of the Revenue Act of 1918, and, therefore, that the accounts of the Fougner Concrete Steel Co. must be restored to the consolidated income and profits tax return as claimed by the taxpayer, and that the deficiency in tax found by the Commissioner must be disallowed.