Court Opinion

ID: 4593627
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:11:12.74848+00
Date Added: 2024-06-11T07:51:06.117787
License: Public Domain

SIOUX CITY STOCK YARDS CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Sioux City Stock Yards Co. v. CommissionerDocket Nos. 12228, 20210.United States Board of Tax Appeals21 B.T.A. 973; 1930 BTA LEXIS 1758; December 30, 1930, Promulgated 1930 BTA LEXIS 1758">*1758  1.  Where the respondent made jeopardy assessments for the years 1918 and 1919 prior to the expiration of the five-year statutory period, and where the petitioner and the respondent consented to extensions of time within which the assessment and collection of additional taxes for each of those years might be made, which periods as extended had not expired prior to the filing of a petition, held that the statute of limitations had not run for the collection of the jeopardy assessments made in March, 1924.  2.  Prior to 1913 the petitioner conveyed to the Cudahy Packing Co. and to Armour & Co. certain packing plants and issued to those companies $900,000 par value of its capital stock in exchange for certain contracts from those companies providing that they would over a period of years purchase their livestock requirements for the operation of the packing plants from the petitioner's yards, and in its income and profits-tax returns for the years involved included in invested capital $900,000 as a part of the value of those contracts to the petitioner.  This claim for invested capital was disallowed by the respondent.  Held that in the absence of evidence as to the cash value1930 BTA LEXIS 1758">*1759  of the contracts in question, the petitioner was not entitled to include in invested capital any part of the $900,000 thus disallowed by the Commissioner.  3.  In 1901 and 1902, the petitioner expended $136,000 in the enlargement of one of its packing plants and charged the same to expense upon its books of account.  Held that the $136,000 should be included in the computation of invested capital.  4.  In 1903, 1904, 1905, and 1906, the petitioner expended $94,913.47 for improvements to its lands, which amount was charged to expense upon its books of account.  The Commissioner excluded the $94,913.47 from invested capital for the taxable years in question.  Held that the amount was improperly excluded by the Commissioner.  Robert A. Littleton, Esq., and James A. Councilor, C.P.A., for the petitioner.  John D. Foley, Esq., and L. W. Creason, Esq., for the respondent.  SMITH 21 B.T.A. 973">*974  These proceedings, which were consolidated for hearing and opinion, are for the redetermination of income and profits tax for the calendar years 1918, 1919, and 1920.  The respondent alleges that for the year 1919 there is a deficiency in income and profits1930 BTA LEXIS 1758">*1760  tax amounting to $20,496.54; that for the year 1919 there is a deficiency in income tax amounting to $1,901.87; and that for the year 1920 there is a deficiency in income and profits tax amounting to $7,425.80.  The petitioner alleges (1) with respect to the years 1918 and 1919, that the statute of limitations has run; (2) with respect to the years 1918, 1919, and 1920, that there should be included in invested capital an item of $900,000 representing the aggregate par value of certain stock issued in the Cudahy Packing Co. and to Armour & Co., an additional item of $136,000 charged to expense on account of a certain contract with the International Packing Co., and a further item of $94,913.47 charged to expense in connection with the change of the channel of Floyd River; and (3) that, in the alternative, special assessment should be allowed for the year 1920.  FINDINGS OF FACT.  The petitioner is an Iowa corporation with its office and principal place of business at Sioux City.  It was incorporated in 1894, with an authorized capital stock of $2,500,000, divided into 12,500 shares each of common and preferred stock of a par value of $100 per share.  Its articles of incorporation1930 BTA LEXIS 1758">*1761  subsequently were amended so as to increase its authorized capital to $3,000,000 and to prolong its life for an additional period of 20 years from April 28, 1914.  During the taxable years in question the capital stock outstanding amounted to 28,483 shares of a par value of $2,848.300.  Petitioner owns and operates a stockyard and its principal sources of income are charges for unloading, yarding, and feeding livestock shipped to its yards, and rent from the letting of office space and other facilities.  It is not and never has been engaged in the business of buying and selling livestock and none of its income is derived from that source.  Its prosperity is mainly dependent upon the 21 B.T.A. 973">*975  maintenance of a competitive market for livestock of such a character as will cause stock raisers and shippers to deal in such market.  On April 1, 1895, the petitioner entered into a contract with the Cudahy Packing Co. whereby the petitioner issued to the Cudahy Packing Co. $200,000 par value of its capital stock, divided into 1,000 shares each of common and preferred, and conveyed to the Cudahy Packing Co. a certain parcel of real estate, together with the improvements thereon consisting1930 BTA LEXIS 1758">*1762  of a packing plant and facilities, the Cudahy Packing Co. agreeing to maintain and operate, for a period of 10 years from January 1, 1895, a packing and slaughter house and to purchase during that term at the stockyard of the petitioner sufficient livestock to enable the Cudahy Packing Co. to operate its business.  The parties further agreed that in the event the Cudahy Packing Co. failed to carry out its agreement the property conveyed and a proportional part of the stock issued should revert to the petitioner and also that the Cudahy Packing Co. could voluntarily terminate the contract upon 30 days notice, in which event the stock and other property would revert to the petitioner upon the same terms.  It was further expressly understood and agreed between the parties that the contract did not and should not be construed as imposing or creating any duty, obligation, or liability whatsoever upon the Cudahy Packing Co. other than that the right to a reversion should exist in favor of the petitioner.  An additional contract was entered into with the Cudahy Packing Co. on November 17, 1897.  The petitioner issued to the Cudahy Packing Co. an additional $300,000 par value of stock of1930 BTA LEXIS 1758">*1763  the petitioner, divided into 1,500 shares each of common and preferred, and conveyed to the Cudahy Packing Co. certain additional property in return for further assurances of the Cudahy Packing Co. of like tenor to those given in the contract of April 1, 1895.  On January 1, 1906, a further contract was entered into between the petitioner and the Cudahy Packing Co. whereby the agreements then in force were to be continued during a period ended June 30, 1919, the agreements of April 1, 1895, and November 17, 1897, extending over a period of only 10 years from January 1, 1895.  On September 21, 1899, the petitioner entered into a contract with the International Packing Co. whereby the petitioner issued to the International Packing Co. $200,000 par value of stock of the petitioner, divided into 1,000 shares each of common and preferred, and conveyed to the International Packing Co. certain premises known as the Silberhorn plant and further agreed to reimburse the International Packing Co. for such expenditures as it might make in enlarging, repairing, and refitting the buildings constituting the 21 B.T.A. 973">*976  Silberhorn plant to a total amount not exceeding $100,000, later increased to1930 BTA LEXIS 1758">*1764  an amount not exceeding $150,000.  The International Packing Co. agreed to operate the Silberhorn plant for a period of 10 years and to purchase its requirements in the way of livestock through the petitioner.  In the event of termination of the contract prior to the expiration of the 10-year period the property conveyed was to revert to the petitioner.  Operations under this contract proved to be unsuccessful and it was terminated in the year 1901.  However, the petitioner actually paid out and charged to expense the amount of $136,000 on account of money spent by the International Packing Co. in enlarging, repairing, and refitting the buildings conveyed to it.  Such payments were made to the International Packing Co. and charged to expense in the amounts and during the years as follows: 1900$50,000190166,000190220,000Total136,000Coincident with the return of the Silberhorn plant to the petitioner, as well as the shares of stock issued to the International Packing Co. under the contract of September 21, 1899, the petitioner entered into a contract with Armour & Co. on May 1, 1901, and a supplemental contract dated May 14, 1901, whereby the petitioner1930 BTA LEXIS 1758">*1765  issued to Armour & Co. $400,000 par value of stock of the petitioner, divided into 2,500 shares of common and 1,500 shares of preferred, and conveyed to Armour & Co. certain real estate, including the Silberhorn plant, which had previously been conveyed to the International Packing Co.  Armour & Co. agreed to maintain and operate a packing plant on the premises conveyed for a period of 10 years and to purchase its livestock requirements for the packing plant through the yards of the petitioner.  The parties further agreed that in the event Armour & Co. failed to carry out its agreement the property conveyed and a proportional part of the stock issued should revert to the petitioner, and also that Armour & Co. could voluntarily terminate the contract upon 30 days notice, in which event the stock and other property would revert to the petitioner upon the same terms.  It was further expressly understood and agreed between the parties that in no event should any claim or liability be imposed or any claim or liability for damages asserted against Armour & Co. by reason of the breach of any of the provisions of the contract, except the liability to have the title to the premises conveyed1930 BTA LEXIS 1758">*1766  and a proportionate amount of the stock transferred revert to the petitioner.  21 B.T.A. 973">*977  By virtue of the foregoing and other contracts with packers which the petitioner was able to secure from time to time, and which were available to petitioner for use as collateral in refinancing its mortgage liabilities, it succeeded in establishing at its yards a large competitive market and the advantages accruing to the petitioner from such contracts are directly reflected in the stimulus given to the Sioux City stock market and to the receipts of livestock by the petitioner and petitioner's consequent increase in earnings.  Such condition is the normal and expected outcome from relationships such as those established by the petitioner with the various packers.  Such relationships are mutually advantageous and benefit both the packer and the stockyard.  In addition to the buyers for the packing houses, there were in daily attendance at the stockyard other buyers, whose orders and activities were correspondingly increased.  Prior to the year 1902 the Floyed River traversed the property of the petitioner in an irregular channel and emptied into the Missouri River.  Between the years 19021930 BTA LEXIS 1758">*1767  and 1906, the course of the Floyd River was changed so that it now runs along the eastern edge of petitioner's stockyards and empties into the Missouri River at a point below its former mouth.  The Board of Commissioners appointed by the City Council of Sioux City to determine damages and benefits incident to the change in the course of the Floyd River recommended that an award of damages be made to the Chicago & Northwestern Railway Co. in the amount of $53,500 and that said sum be assessed as a benefit against the petitioner.  Such recommendation was approved by the City Council of Sioux City and the award and assessment were made accordingly.  Thereafter, the petitioner entered into a contract with Fox and Smith, copartners, to fill in the old channel of the Floyd River.  The total cost to the petitioner of the change in the channel of Floyd River and of the filling in of the old channel amounted to $94,913.47, which was paid out and charged to expense during the years and in amounts as follows: 1903$55,181.3519041,756.35190520,189.53190617,786.24Total94,913.47A large part of the petitioner's capital stock was originally issued to the holders1930 BTA LEXIS 1758">*1768  of bonds, notes, and capital stock of its predecessor, Union Stock Yards Co., in exchange for the obligations and shares of stock of that company.  Some of it was, however, sold to subscribers for cash at par.  The petitioner operated with indifferent 21 B.T.A. 973">*978  success for a number of years after its organization.  It paid its first dividend on the preferred stock at the rate of 4 per cent per annum in 1900.  It continued to pay dividends at the rate of 4 per cent per annum upon the preferred stock until 1905, when the rate was increased to 6 per cent.  In 1905, it began paying dividends on its common stock and has paid at the rate of 2 per cent per annum to and including 1920, except that the rate was approximately 3 per cent for the years 1913 and 1916.  On or about March 14, 1919, petitioner filed a tentative income and excess-profits tax return for the year 1918, and on or about June 14, 1919, it filed a completed income and excess-profits-tax return for that year.  The tax shown to be due on such returns amounted to $31,860.63.  This amount was assessed against the petitioner on the March, 1919, list and the assessment has been paid.  The petitioner filed its income and excess-profits1930 BTA LEXIS 1758">*1769  tax return for the year 1919 on or about March 15, 1920.  The tax shown to be due on such return amounted to $16,923.58.  This amount was assessed against the petitioner on the March, 1920, list and the assessment has been paid.  Subsequent to the filing of petitioner's returns for the years 1918 and 1919 the respondent, on or about March 11, 1924, made an additional assessment for the year 1918 in the amount of $20,496.54, and an additional assessment for the year 1919 in the amount of $1,901.87.  At various dates the petitioner and the respondent executed consents in writing which, so far as material to these proceedings, are as follows: WAIVER THE SIOUX CITY STOCK YARDS COMPANY, a corporation organized under the laws of the State of Iowa, in consideration of the assurance given it by officials of the Income Tax Unit of the Bureau of Internal Revenue that its liability for all Federal taxes imposed by the Act of Congress approved February 24, 1919, for the year ended December 31, 1918, on its net income received from all sources in said year, shall not be determined except after deliberate, intensive and thorough consideration, hereby waives any and all statutory limitations1930 BTA LEXIS 1758">*1770  as to the time within which assessments based upon such liability may be entered.  It is understood, however, that the above corporation does not, by the execution of this waiver, admit in advance the correctness of any assessment which may be made against it for said year by the officials of the Income Tax Unit.  Executed this thirteenth day of December, 1923.  SIOUX CITY, IOWA, Jan. 26, 1924.(Date) INCOME AND PROFITS TAX WAIVER In pursuance of the provisions of subdivisions (d) of Section 250 of the Revenue Act of 1921, Sioux City Stock Yards Company, of Sioux City, Iowa and the Commissioner of Internal Revenue, hereby consent to a determination, assessment and collection of the amount of income, excess-profits, or warprofits taxes due under any return made by or on behalf of the said Company for the year 1918 under the Revenue Act of 1921, or under prior income, excess-profits, or war-profits tax Acts, or under Section 38 of the Act entitled "An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes", approved August 5, 1909.  This waiver is in effect from the date it is signed by the taxpayer and will remain1930 BTA LEXIS 1758">*1771  in effect for a period of one year after the expiration of the statutory period of limitation, or the statutory period of limitation as extended by any waivers already on file with the Bureau, within which assessment of taxes may be made for the year or years mentioned.  SIOUX CITY, IOWA, Dec. 1, 1924.(Date) INCOME AND PROFITS TAX WAIVER In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, The Sioux City Stock Yards Company of Sioux City, Iowa, and the Commissioner of Internal Revenue, hereby consent to a determination, assessment, and collection of the amount of income, excess-profits, or warprofits taxes due under any return made by or on behalf of the said Taxpayers for the year 1918 under the Revenue Act of 1921, or under prior income, excessprofits, or war-profits tax Acts, or under Section 38 of the Act entitled "An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes," approved August 5, 1909.  This waiver is in effect from the date it is signed by the taxpayer and will remain in effect for a period of one year after the expiration of the statutory period of1930 BTA LEXIS 1758">*1772  limitation, or the statutory period of limitation as extended by any waivers already on file with the Bureau, within which assessments of taxes may be made for the year or years mentioned.  SIOUX CITY, IOWA, December 1, 1924.(Date) INCOME AND PROFITS TAX WAIVER In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, The Sioux City Stock Yards Company of Sioux City, Iowa, 21 B.T.A. 973">*979  and the Commissioner of Internal Revenue, hereby consent to a determination, assessment, and collection of the amount of income, excess-profits, or warprofits taxes due under any return made by or on behalf of the said Taxpayers for the year 1919 under the Revenue Act of 1921, or under prior income, excess-profits, or war-profits tax Acts, or under Section 38 of the Act entitled "An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes," approved August 5 1909.  This waiver is in effect from the date it is signed by the taxpayer and will remain in effect for a period of one year after the expiration of the statutory period of limitation, or the statutory period of limitation as extended by1930 BTA LEXIS 1758">*1773  any waivers already on file with the Bureau, within which assessments of taxes may be made for the year or years mentioned.  21 B.T.A. 973">*980  INCOME AND PROFITS TAX WAIVER For Taxable Years Ended Prior to January 1, 1922 DECEMBER 21, 1925 In pursuance of the provisions of existing Internal Revenue Laws THE SIOUX CITY STOCK YARDS COMPANY, a taxpayer of SIOUX CITY, IOWA, and the Commissioner of Internal Revenue hereby waive the time prescribed by law for making any assessment of the amount of income, excess-profits, or warprofits taxes due under any return made by or on behalf of said taxpayer for the year (or years) 1918 and 1919 under existing revenue acts, or under prior revenue acts.  This waiver of the time for making any assessment as aforesaid shall remain in effect until December 31, 1926, and shall then expire except that if a notice of a deficiency in tax is sent to said taxpayer by registered mail before said date and (1) no appeal is filed therefrom with the United States Board of Tax Appeals then said date shall be extended sixty days, or (2) if an appeal is filed with said Board then said date shall be extended by the number of days between the date of mailing of said1930 BTA LEXIS 1758">*1774  notice of deficiency and the date of final decision by said Board.  The respondent notified the petitioner of his denial of its claims for the abatement of the additional taxes assessed in March, 1924, in a letter dated January 18, 1926.  The petitioner filed its appeal from such determination with this Board on February 20, 1926.  OPINION.  SMITH: In each of these proceedings original and amended petitions were filed which recited numerous assignments of error.  At the hearing, however, counsel for the petitioner relied on, and the testimony adduced relates to, only the issues as to whether - (1) The statute of limitations has run with respect to the collection of the additional assessments for the years 1918 and 1919.  (2) There was erroneously excluded from invested capital $900,000 representing the aggregate par value of certain shares of its capital stock issued to the Cudahy Packing Co. and Armour & Co. as a part of the consideration for certain contracts.  (3) There was erroneously excluded from invested capital $136,000 paid by the petitioner for the enlargement of one of its packing plants and charged to expense upon the petitioner's books of account.  (4) There1930 BTA LEXIS 1758">*1775  was erroneously excluded from invested capital $94,913.47 paid in connection with a change of the channel of the Floyd River and charged to expense upon the petitioner's books of account.  (5) The petitioner, in the alternative, is entitled to special assessment for the year 1920.  With respect to the limitations issue, it appears that for the years 1918 and 1919, the five-year period expired on June 13, 1924, and 21 B.T.A. 973">*981  March 14, 1925, respectively.  Jeopardy assessments of additional tax for the year 1918, amounting to $20,496.54, and of an additional tax for the year 1919, amounting to $1,901.87, were made in March, 1924, prior to the expiration of the respective five-year periods.  On January 26, 1924, the petitioner and the respondent consented to an extension of the statutory period for assessment and collection of taxes for the calendar year 1918 for one year.  On December 1, 1924, the petitioner and the respondent consented to an extension of time for assessment and collection of taxes for the calendar years 1918 and 1919 for a period of one year after the expiration of any waiver then on file with the respondent.  On December 1, 1925, the petitioner and the respondent1930 BTA LEXIS 1758">*1776  consented to a further extension of the time within which assessments for the years 1918 and 1919 could be made.  In a letter dated January 16, 1926, the petitioner was advised that the respondent had rejected claims in abatement of the additional taxes assessed in March, 1924, for the years 1918 and 1919.  The petitioner appealed to the Board from the respondent's notice of rejection of the claims in abatement on February 20, 1926, and the appeal relating to the years 1918 and 1919 was pending before the Board at the date of the enactment of the Revenue Act of 1926.  Counsel for petitioner, on brief, contends that although the respondent duly and regularly agreed with the petitioner for the assessment and collection of taxes due for the years 1918 and 1919 at a date after the expiration of the statutory period of limitations, he subsequently revoked and rejected such agreements on his part and proceeded to assess deficiencies in taxes prior to the expiration of the respective five-year periods, and that the consents of January 26, 1924, and December 1, 1924, all contemplated the assessment and collection of taxes for the years 1918 and 1919, determined to be due after the date of1930 BTA LEXIS 1758">*1777  their execution and after the statutory periods for making assessments and collections had expired.  Furthermore, that from the wording of the consents they were not intended to affect determinations, assessments, or collections of taxes determined and assessed prior to the expiration of the respective statutory periods for making assessment and collection and were intended to cover determinations, assessments, or collections of taxes that might be found to be due for the years 1918 and 1919, after the respective periods for assessment and collection thereof had expired.  We are not impressed with the foregoing reasoning of counsel for the petitioner.  There is an unbroken chain of consents extending the period for collection of the taxes in dispute and we are of the opinion that the respondent is entitled to predicate his action with respect to collection of the additional assessments thereon.  Consequently, 21 B.T.A. 973">*982  this issue must be resolved in favor of the respondent.  . In the second issue the petitioner complains that the respondent has understated its invested capital for the years in controversy1930 BTA LEXIS 1758">*1778  by the amount of $900,000, this being the aggregate par value of the capital stock issued to the Cudahy Packing Co. under the agreements of April 1, 1895, and November 17, 1897, and to Armour & Co. under the agreement of May 1, 1901.  The respondent has denied the claim of the petitioner upon this point on the ground that the contracts had expired prior to the taxable years involved.  Our findings show, however, that the contracts had not fully expired prior to 1918.  Section 326 of the Revenue Act of 1918 permits the inclusion in invested capital of - (2) Actual cash value of tangible property, other than cash, bona fide paid in for stock or shares, at the time of such payment, but in no case to exceed the par value of the original shares specifically issued therefor, unless the actual cash value of such tangible property at the time paid in is shown to the satisfaction of the Commissioner to have been clearly and substantially in excess of such par value, in which case such excess shall be treated as paid-in surplus: * * * and - (4) Intangible property bona fide paid in for stock or shares prior to March 3, 1917, in an amount not exceeding (a) the actual cash value of such1930 BTA LEXIS 1758">*1779  property at the time paid in, (b) the par value of the stock or shares issued therefor, or (c) in the aggregate 25 per centum of the par value of the total stock or shares of the corporation outstanding on March 3, 1917, whichever is lowest.  We are satisfied from the evidence that a large part of the value of the contracts made by the Cudahy Packing Co. and Armour & Co. with the petitioner did not vanish with the expiration of the contracts.  For the contracts the petitioner turned over to these packing companies valuable real estate (to the Cudahy Packing Co a tract of land of approximately 12 acres with buildings thereon), and issued to the packing companies the shares of capital stock in question.  It clearly was not the contemplation of the petitioner or of the packing companies that they would discontinue their operations in Sioux City upon the expiration of the contracts.  The relationship which the petitioner established with the Cudahy Packing Co. and Armour & Co. was approximately as valuable to the petitioner in 1918 as in the years when the contracts were entered into between the petitioner and the packing companies.  The self-interest of the packing companies would prompt1930 BTA LEXIS 1758">*1780  them to continue this relationship even though the contracts had expired.  Cf. . The record is silent as to the value of these contracts to the petitioner either at the date the contracts were first acquired or during 21 B.T.A. 973">*983  the taxable years involved.  The petitioner asks us to assume that the contracts had a cash value to the petitioner at the time they were acquired not only of $900,000 but of $900,000 in excess of the petitioner's investment in the packing plants, which were conveyed to the packing companies as part consideration for the contracts, which investment, with the exception of $136,000 to be considered below, was included in invested capital and not disturbed by the respondent in his computation of invested capital.  In the circumstances of the case we are not able to determine from the evidence that the contracts had a cash value to the petitioner at any time in excess of the cash investment of the petitioner in the properties actually conveyed to the packing companies in order to induce them to operate packing plants at Sioux City.  The determination of the respondent upon this point1930 BTA LEXIS 1758">*1781  is prima facie correct.  The evidence of record does not, in our opinion, establish the claim of the petitioner that it is entitled to include in invested capital any part of the $900,000 disallowed by the respondent.  The third contention of the petitioner is that it is entitled to include in invested capital $136,000 representing the cost to it of improvements made to the packing plant that was subsequently conveyed to Armour & Co.  The amount spent for these improvements was originally charged to expense.  If the amount had been capitalized, as it should have been, we apprehend that no question would have arisen with respect to the right of the petitioner to include in invested capital the $136,000.  The failure of the petitioner properly to account for the $136,000 on its books of account in the years 1903 to 1906, inclusive, does not warrant the exclusion from invested capital of the $136,000 in question.  . The contention of the petitioner upon this point is sustained.  With respect to the fourth issue, counsel for the respondent on brief states that: If the taxpayer has proved the expenditure of money in 1903 to 1906, 1930 BTA LEXIS 1758">*1782  inclusive, in changing the course of the Floyd River and has proved that the amounts so spent were charged against surplus, they may properly be restored to invested capital.  We agree with this position of the respondent.   We have found as a fact that the amount of $94,913.47 was spent by the petitioner in connection with the change in the course of the Floyd River and was charged to expenses.  The accounting made for the expenditures which were of a capital nature operated to reduce earned surplus to the extent of $94,913.47.  The amount in question should be restored to earned surplus and included in invested capital.  21 B.T.A. 973">*984  The special assessment issue raised alternatively by the petitioner must be resolved in favor of the respondent.  The respondent determined that the petitioner and affiliated companies had a net income for 1920 of $231,580.86, and an invested capital of $2,656,846.15, and computed an excess-profits tax due of $3,206.63.  We have ruled that the petitioner is entitled to have its invested capital for 1920 increased by the amounts of $136,000 and $94,913.47.  These increases will further reduce the excess-profits1930 BTA LEXIS 1758">*1783  tax payable.  Section 327(d) of the Revenue Act of 1918 provides in part: Where upon application by the corporation the Commissioner finds and so declares of record that the tax if determined without benefit of this section.  would, owing to abnormal conditions affecting the capital or income of the corporation, work upon the corporation an exceptional hardship evidenced by gross disproportion between the tax computed without benefit of this section and the tax computed by reference to the representative corporations specified in section 328.  * * * It is inconceivable that an excess-profits tax liability of $3,206.63, further reduced by the increases allowed to invested capital, would work an exceptional hardship upon a group of corporations having a total net income of $231,580.86.  Reviewed by the Board.  Judgment will be entered under Rule 50.STERNHAGEN and MURDOCK dissent.