Court Opinion

ID: 4601328
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:27:23.207344+00
Date Added: 2024-06-11T07:52:28.653191
License: Public Domain

TAYLOR OIL & GAS CO. ET AL., 1 PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.  Taylor Oil & Gas Co. v. CommissionerDocket No. 20168.United States Board of Tax Appeals15 B.T.A. 609; 1929 BTA LEXIS 2819; February 26, 1929, Promulgated *2819  The sale herein is held to have been a sale of assets of a corporation in dissolution, and not a sale of property of the individual stockholders.  George E. Shelley, Esq., for the petitioners.  C. H. Curl, Esq., for the respondent.  LOVE *610  The Commissioner determined a deficiency for the calendar year 1920, of $34,398.83, in respect of the tax of the Taylor Oil & Gas Co., as set forth in his notice of deficiency mailed to that company on July 28, 1925, and presents for determination one issue only, to wit: Whether the gain derived from the sale of certain oil-producing real and personal property accrued to the corporation and is taxable to certain stockholders as transferees; or whether such gain accrued directly to the stockholders in a liquidating dividend, and as such is taxable to them upon their individual returns at individual rates.  No question is raised under section 280 of the Revenue Act of 1926.  The transferees raised no question as to the correctness of the tax determined against the Taylor Oil & Gas Co. and their liability for it as transferees if it be held that the profit accrued to the corporation on the sale instead of*2820  to them as liquidating dividends.  The Commissioner also mailed notices to the individual petitioners herein of his determination in respect to their liability as transferees for the deficiency determined against the corporation, in which he showed the liability of each of the petitioner transferees as follows: R. S. Dilworth$5,000C. E. Dilworth5,000F. R. Womack2,000G. M. Booth2,000J. A Thompson5,000O. E. Roberts2,000T. E. Burns5,000C. H. Cooke5,000C. H. Burns$4,000J. V. Stiles2,000Mrs. Eliza Stiles3,000Edmond Doak5,000Howard Bland, Sr2,000S. G. Gernert2,000W. R. Dulaney4,000FINDINGS OF FACT.  The Taylor Oil & Gas Co. (hereinafter referred to as the Gas Company) was a Texas corporation, with its principal office at Taylor.  It was engaged in the production of oil and was possessed of sundry leases, together with the buildings, machinery, and other equipment necessary for such production.  Late in 1919 certain negotiations were entered into between the Gas Company and the Magnolia Petroleum Co. (hereinafter referred to as the Magnolia Company), looking to the purchase by the Magnolia Company of substantially*2821  all of the Gas Company's assets for $150,000 cash.  In the course of the preliminaries, and about December 1, 1919, the officers of the Gas Company consulted an attorney and it was determined that the tax on the profit to be derived from the transaction under consideration would be so large ("between $35,000 and $40,000") as to be prohibitive; but the attorney *611  advised them that he believed that if the corporation were dissolved and the sale were made by the stockholders, each stockholder would be held to pay his proportionate share of the tax on whatever profit accrued to him individually therefrom, and the corporation, being nonexistent, would not be liable for any tax.  The matter was discussed with some of the officers of the Magnolia Company and, accordingly, on December 5, 1919, the following proposal was made to the board of directors of the Gas Company: DALLAS, TEXAS, December 5th, 1919.To the BOARD OF DIRECTORS OF THE TAYLOR OIL & GAS COMPANY.  GENTLEMEN: The Magnolia Petroleum Company submits the following proposition: Upon the dissolution of the Taylor Oil & Gas Company, a corporation organized under the laws of the State of Texas, of which you*2822  are the Board of Directors, and proper legal authorization to you to make the sale and conveyance and to execute the contracts hereinafter referred to, the Magnolia Petroleum Company will purchase the property of the said Taylor Oil & Gas Company, except the machinery, tools and equipment in connection with the deep well test situated on the property hereinafter described.  This proposition relates more particularly to the purchase by the Magnolia Petroleum Company from the Taylor Oil & Gas Company of an oil and gas lease on two tracts of land, one of said tracts embracing One Hundred and Nineteen (119) Acres of land, and is situated on the Daniel Kimbro Survey and the other tract of One Hundred Forty-two (142) acres situated near the other above named tract, both of said tracts of land being near Taylor, Williamson County, Texas, and being the only land held under lease by the Taylor Oil & Gas Company from Mrs. Eliza Styles; the said Magnolia Petroleum Company to get all tools, machinery, implements and apparatus in connection with said lease, except the machinery and tools used in connection with what is known as the "Deep Well Test," and the books, accounts and money owned by said*2823  company.  The consideration to be paid by the Magnolia Petroleum Company for said properties shall be One Hundred Fifty Thousand ($150,000) Dollars in cash.  The purchase by the Magnolia Petroleum Company is to be consummated upon the dissolution of the Taylor Oil & Gas Company legally and as required by law, and the proper legal authorization for the sale, if good, valid, clear and merchantable title is shown to the property to be purchased, and you are to furnish us a complete abstract of the title to said property brought down to date, and the attorneys of the Magnolia Petroleum Company agree to promptly examine and report on said title, such report to be made within ten days after the receipt of the abstract.  The purchase is to be considered as effective just as though completed on December 15th, 1919, so that the Magnolia Petroleum Company shall, if the transaction is finally consummated, be entitled to the oil produced from the property so sold and the proceeds thereon on and after December 15th, 1919.  All expense of operation and development of said properties embraced in the sale, or any expense or charges incurred in connection with the same on and after said date, *2824  shall be payable out of said oil and the proceeds thereof, accruing on or after said date, you to pay off all indebtedness in connection with the operation and development thereon prior to said date.  *612  It is understood and here stated that, subject to the final legal authorization by your stockholders you must, within fifteen (15) days from the date hereof, accept this proposition and, if accepted, you are to turn over to F. V. Faulkner possession of said lease and all property connected therewith, not later than January 1st, 1920.  This proposition is made subject to the declaration of trust of the trustees of the Magnolia Petroleum Company, of date April 24th, 1919, recorded in book 120, page 347, Deed Records, Jefferson County, Texas, reference to which is here made, under which any party contracting with the Magnolia Petroleum Company must look alone to its property and assets for the satisfaction and payment of any debt, demand, liability, judgment or decree arising out of the contract and there is to be no personal liability against said trustees, officers and stockholders of the Company.  This proposition is submitted in duplicate and in case of your acceptance, *2825  you can write and return your acceptance on the copy.  MAGNOLIA PETROLEUM COMPANY, By F. V. FAULKNER.  It is in evidence, and not contradicted, that this proposal was never submitted to the board of directors (as such) of the Gas Company for their consideration and action, but a call was immediately issued for a special stockholders' meeting to dissolve the corporation.  Pursuant to such call, the meeting was held at the office of the Gas Company in Taylor, Tex., on January 16, 1920, and the following resolution was unanimously passed and adopted: Be it resolved by the Stockholders of the Taylor Oil & Gas Company, that it is the sense and desire of said Stockholders that the corporate existence of said Taylor Oil & Gas Company be, and the same is hereby finally and forever dissolved.  And the Stockholders of said Company, in meeting here assembled, signified in writing their consent to the dissolution of said Company, and the President and Officers of said Company are hereby instructed to file said written consent of the Stockholders of this Company, with the Secretary of State of the State of Texas, and to do any and all other acts and things necessary to legally dissolve*2826  this Company.  On the same date and at the same meeting, after the stockholders had passed the aforementioned resolution authorizing the dissolution of the Taylor Oil & Gas Co., the following resolution was introduced and unanimously passed: Whereas, the Stockholders and Board of Directors of The Taylor Oil & Gas Company, have authorized the dissolution of said corporation, and the President and Secretary of said Corporation have been instructed to certify same to the Secretary of State of the State of Texas.  And whereas, we, the Stockholders of the said Taylor Oil & Gas Company, desire that some one shall be authorized to close up the affairs of said Corporation, now therefore, be it resolved by the Stockholders of said Taylor Oil & Gas Company in session: that the Board of Directors of said Taylor Oil & Gas Company shall act as liquidating trustees for this Corporation, and that the President and the Directors of this Corporation at this time shall be Trustees of the creditors and the Stockholders of this Corporation with full power to settle the affairs, collect the outstanding debts and divide the monies and other property of this Corporation among its Stockholders, after*2827  paying the *613  debts due and owing by this Corporation at the time of the dissolution of the same; and to this end and for this purpose, they may in the name of said Taylor Oil & Gas Company, sell, convey and transfer all real and personal property belonging to said Company, collect all debts due same, compromise all controversies, maintain and defend judicial proceeding, and exercise the full power and authority of said Company, over all its assets and properties.  And being expressly authorized and empowered to do any and every act or thing necessary to convert the assets and properties of said Corporation into cash, pay all of its indebtedness, and to divide the net proceeds of such assets among the Stockholders of said Company.  It is further especially understood that said Board of Directors and Officers, acting as liquidating Trustees, shall have full power and authority to sell to the Magnolia Petroleum Company, the properties belonging to said Taylor Oil & Gas Company, leased by said Taylor Oil & Gas Company from Mrs. Eliza Stiles, and located near Thrall, in Williamson County, Texas, together with all oil wells, power houses, tools, teams, machinery and equipment upon*2828  and pertaining to said Stiles leases.  The said Trustees are given full authority to execute all deeds, instruments and contracts relating to said transaction, or to do and perform everything necessary to effect the consummation of said sale.  On January 17 the necessary documents were executed to accomplish the authorized dissolution, which papers were filed with the Secretary of State of the State of Texas, on January 20, 1920, thereby complying with all the formalities required by law.  Thereafter, on January 26, 1920, a deed was executed conveying all the real property and substantially all the personal property of the Gas Company (or of its stockholders, as it shall appear) to the trustees of the Magnolia Company, such deed being in the form and words following: THE STATE OF TEXASCOUNTY OF WILLIAMSONWHEREAS, The Taylor Oil & Gas Company, a private corporation, duly incorporated under the laws of the State of Texas, having its office in the City of Taylor, Williamson County, Texas, was on the 20th day of January, A.D. 1920, dissolved according to law, and at the time of the dissolution of said Corporation, and for a long time prior thereto, James A. Thompson, was the*2829  President of said Company, and James A. Thompson, Edmond Doak, J. V. Stiles, T. E. Burns and Robert J. Eckhardt, all of Williamson County, Texas, R. S. Dilworth of Gonzales County, Texas, and G. E. Nance of Taylor County, Texas, were the Board of Directors of said Corporation: AND FURTHER, WHEREAS, said President and Board of Directors of said Corporation, are at this time acting as Trustees for the stockholders and creditors of said corporation, under and by virtue of the statutes of the State of Texas, and also under authority conferred upon them by the express resolution of the stockholders of said corporation, passed and adopted at a meeting held on the 16th day of January, A.D. 1920; said resolution authorizing and directing said Trustee to make the hereinafter set out conveyance.  Now, THEREFORE, know all men by these presents: That we, James A. Thompson, Edmond Doak, R. S. Dilworth, E. G. Nance, J. V. Stiles, T. E. Burns and Robert J. Eckhardt, acting herein as Trustees, for the stockholders and creditors of said Taylor Oil & Gas Company, for and in consideration of the sum of *614  ONE HUNDRED AND FIFTY THOUSAND & NO 100 ($150,000) Dollars, cash in hand to us paid*2830  as such Trustees, by John Sealy, E. R. Brown, R. Waverly Smith, E. E. Plumly and George C. Greer, as Trustees of Magnolia Petroleum Company, a joint stock association, having its principal office in Galveston, Texas, to be held by said Trustees, their successors in trust and assigns for the use and benefit of Magnolia Petroleum Company: HAVE sold, assigned and conveyed, and by these presents do sell, assign and convey unto the said John Sealy, E. R. Brown, R. Waverly Smith, E. E. Plumly and George C. Greer, as Trustees of said Magnolia Petroleum Company, the following described premises and properties, towit: 1.  All those certain oil and gas leases in Williamson County, Texas, described as follows: Lease granted by Mrs. Eliza Stiles to James A. Thompson, Trustee, by instrument of date March 13th, A.D. 1915, and recorded in Volume 163, page 527, of the Deed Records of Williamson County, Texas, covering two certain tracts or parcels of land, lying and being situated in the county of Williamson and State of Texas, a part of the Daniel Kimbro survey, and described as follows, to wit: (Here follows a description of the two tracts or parcels of land.) THE ABOVE LEASEHOLD INTERESTS*2831  and properties have been transferred by said James A. Thompson to Taylor Oil & Gas Company, by instrument dated April 17th, A.D. 1915, and recorded in Volume 169, page 134, of the deed records of Williamson County, Texas.  2.  Also oil wells and equipment, tanks, casing, derricks and all other materials of every description belonging to said Taylor Oil & Gas Company, and situated upon the above described premises, save and except the machinery and equipment belonging to and used in connection with what is known as the "Deep Well Test," upon said 119 acres, which "Deep Well Test," machinery and equipment are excepted from this conveyance.  TO HAVE AND TO HOLD unto the said Trustees for the use and benefit of Magnolia Petroleum Company, its successors and assigns, the said personal property forever, and said leasehold estates for and during the unexpired period of said leases and subject to their terms and conditions.  THIS CONTRACT is subject to the Declaration of Trust, of the Trustees of said Company, of date April 24th, 1911, recorded in Book 120, page 347, Deed Records of Jefferson County, Texas, reference to which is hereby made, under which all parties contracting with Magnolia*2832  Petroleum Company, must look alone to the property and assets of the Company for the satisfaction and payment of any demand against it, and the discharge of its obligations, and the Trustees and stockholders are not to be held personally liable.  EXECUTED THIS THE 26th day of January, A.D. 1920.  JAMES A. THOMPSON, TRUSTEE, EDMOND DOAK, TRUSTEE T. E. BURNS, TRUSTEE, ROBERT J. ECKHARDT, TRUSTEE, R. S. DILWORTH, TRUSTEE, J. V. STILES, TRUSTEE, G. E. NANCE, TRUSTEE.  This instrument was filed for record February 17, 1920, and recorded on the day next following.  On these facts it is contended on behalf of the Gas Company and the transferees that this transaction did not constitute a sale by the *615  Gas Company, but that the corporation was in fact duly, legally and finally dissolved in pursuance of the stautues of the State of Texas, by proper resolution of its stockholders, duly adopted and filed with the Secretary of State of the State of Texas; that the effect of such action was to vest title to all property of the corporation in its president and directors as trustees of the creditors and stockholders of said corporation without further action on its part; *2833  and that whatever gain was derived from the sale to the Magnolia Company was taxable as individual income to each stockholder who was required to make a tax return, by reason of the subsequent distribution by the trustees of the proceeds of the sale.  On the other hand, the respondent contends that the profit here in question accrued to the corporation and should be so taxed to its transferees.  The Gas Company and the transferees admit that the profit from the sale of these properties has been correctly determined by the Commissioner and that in the event it is determined that the profit is taxable to the corporation or its transferees, the amount of the deficiency of $34,398.83 as set forth in the deficiency letter is correct.  OPINION.  LOVE: Admittedly, an attempt was made to avoid the accrual of a tax to the Gas Company on the sale to the Magnolia Company.  In our opinion it fell measurably short of success.  The negotiations preceding this transaction were begun some time in 1919.  By December 5, 1919, all the details and preliminaries had been arranged and agreed to and nothing remained to be done to conclude the transaction except the actual and legal transfer of*2834  title.  The large amount of tax to be incurred by the corporation inspired an inquiry as to the manner in which it could be at least in part legally avoided, and the method detailed in our findings of fact was pursued.  When the proposal of December 5 was made by the Magnolia Company it was addressed "to the Board of Directors of the Taylor Oil & Gas Company," a corporation then in active existence, to be consummated, it is true, only upon the dissolution of that corporation but, nevertheless, the purchase "to be considered effective just as though completed on December 15, 1919," and thought it is in evidence that such proposal was not formally submitted to the board of directors until after the papers in dissolution had been filed, it is not to be assumed or believed that it was not fully known in every detail by each member thereof, and by many, if not all, of the principal stockholders of the corporation.  *616  As promptly thereafter as the law permitted, a special meeting of stockholders was called to dissolve the corporation.  At this meeting held January 16, 1920, two resolutions were adopted.  The first assumed to accomplish the dissolution forthwith, in accordance*2835  with the statutes of the State of Texas in such cases made.  Those statutes in effect in 1920 provide: Where four-fifths in interest of all the stock outstanding shall vote in favor of a dissolution at a stockholders' meeting called for that purpose on notice signed by a majority of the directors, stating time, place and object of the meeting, served personally or by mail at least thirty days next before the meeting.  If, at said meeting, four-fifths in interest of all the stockholders of said company shall consent in writing to the dissolution of the corporation, such written consent, together with a list of the directors and officers of the company, giving postoffice address and place of residence of each, certified by the president and secretary and treasurer as a true and correct action of the stockholders, shall be filed with the Secretary of State.  (Vernon's 1925 Revision Texas Civil Statutes, Art. 1205, p. 242.) Srticle 1206 is as follows: Upon the dissolution of any corporation, unless a receiver is appointed by some court of competent jurisdiction, the president and directors or managers of the affairs of the corporation at the time of its dissolution, by whatever*2836  name they may be known in law, shall be trustees of the creditors and stockholders of such corporation, with full power to settle the affairs, collect the outstanding debts, and divide the moneys and other property among the stockholders after paying the debts due and owing by such corporation at the time of its dissolution, as far as such money and property will enable them after paying all just and reasonable expenses; and to this end, and for this purpose they may in the name of such corporation, sell, convey and transfer all real and personal property belonging to such company, collect all debts, compromise controversies, maintain or defend judicial proceedings, and to exercise the full power and authority of said company over such assets and properties; and the existence of every corporation may be continued for three years after its dissolution from whatever cause for the purpose of enabling those charged with the duty to settle up its affairs; and, in case a receiver is appointed by a court for this purpose, the existence of such corporation may be continued by the courts so long as in its discretion it is necessary to suitably settle up the affairs of such corporation; provided*2837  that the dissolution of a corporation shall not operate to abate, nor be construed as abating any pending suit in which such corporation is a defendant, but such suit shall continue against such corporation and judgment shall be rendered as though the same was not dissolved, and in case no receiver has been appointed for said corporation, suit may be instituted on any claim, against said corporation, as though the same had not been dissolved, and service of process may be obtained on the president, directors, general manager, trustee, assignee, or other person in charge of the [affairs] of the corporation at the time it was dissolved by whatever name they may be known in law, and judgment may be rendered as though the corporation had not been dissolved and the assets of said corporation shall be liable for the payment of such judgment just as if said corporation had not been dissolved.  (Id. Art. 1206, p. 245.) These statutes provide completely for the dissolution of a corporation and the liquidation of its affairs, and the petitioners now rely almost *617  wholly upon such statutes and the action taken under them by the stockholders of the Gas Company, and quote as a precedent*2838  the Board's finding in the case of the , hereinafter referred to.  But the stockholders of the Gas Company were not then content to rely solely upon the statutory provisions and the powers and authority conferred therein upon its president and directors as "trustees of the creditors and stockholders of such corporation, with full power to settle the affairs, collect the outstanding debts, and divide the moneys and other property among the stockholders after paying the debts due and owing by such corporation at the time of its dissolution * * * and to this end, and for this purpose they may in the name of such corporation, sell, convey and transfer all real and personal property belonging to such company.  * * *" Although we are of the opinion that the language of this statute disposes adversely of the petitioners' contention that by virtue of it the legal title to all of the property of the corporation passed automatically and at once to the president and directors of the corporation as trustees for its creditors and stockholders, any doubt that might have remained is settled and all ambiguity has been removed by the*2839  action of the stockholders themselves when at their meeting of January 16, 1920, they passed their second resolution wherein (not relying wholly upon the wording of the statute to confer, beyond question, the necessary powers) they said: Whereas, we, the stockholders of the said Taylor Oil & Gas Company, desire that some one shall be authorized to close up the affairs of said corporation, now therefore, be it resolved by the stockholders of said Taylor Oil & Gas Company in session, that the Board of Directors of said Taylor Oil & Gas Company shall act as liquidating Trustees for this Corporation, and that the President and the Directors of this Corporation at this time shall be the Trustees of the Creditors and the stockholders of this corporation with full power to settle the affairs, collect the outstanding debts and divide the monies and other property of this Corporation, among its stockholders, after paying the debts due and owing by this Corporation at the time of the dissolution of the same; and to this end and for this purpose, they may in the name of said Taylor Oil & Gas Company, sell, convey and transfer all real and personal property belonging to said Company,*2840   * * * and exercise the full power and authority of said Company over all its assets and properties.  And being expressly authorized and empowered to do any and every act or thing necessary to convert the assets and properties of said Corporation into cash, * * *.  (Italics supplied.) Not only do we find all through the statute and the resolutions of the stockholders themselves the tacit recognition and admission that all the property of the corporation remained its property after dissolution until all its debts had been paid and the remaining assets (in whatever form) divided among the stockholders by the trustees created by statute, for their benefit, but we have a direct and undisputed *618  record of the specific appointment by the stockholders of the board of directors "as liquidating Trustees," not for themselves but "for this Corporation."The deed, a certified copy of which is in evidence, discloses that it was executed on January 26, 1920, by all seven members of the board of directors so appointed, each signing individually as "Trustee," and that it conveys "oil wells and equipment, tanks, casing, derricks and all other materials of every description" *2841  (with one certain exception), explicitly "belonging to said Taylor Oil & Gas Company. * * *" (Italics supplied.) The property of the Gas Company continued to be its property until there was a transfer or distribution by the corporation or its liquidating trustees to the stockholders or some one else.  . No transfer or distribution of the corporate assets to the stockholders prior to the sale thereof to the Magnolia Company has been established.  The resolutions referred to did not effectuate a distribution to the stockholders.  In the light of the undisputed facts we hold that these petitioners can not prevail in their claim that they did not act, in any sense or in any way, in the capacity of trustees for the corporation, but that they acted solely as trustees for its creditors and stockholders.  But if this be not sufficient, we revert to the case of Gonzolus Creek Oil Co., cited by the attorney for these petitioners in their support, and we find no comfort for them there.  The issue in that case was entirely different from that under discussion.  There the sole question was whether, in the circumstances surrounding it, those*2842  petitioners, together with the stockholders of that dissolved Texas corporation, constituted "an association," and we found that they did not.  Here the question is whether a sale of the property of the corporation (the proposal and specific offer for such sale having been definitely made to the board of directors of the corporation before its dissolution, but the sale having been consummated after the filing of the necessary certificates of dissolution with the Secretary of State of the State of Texas within the threeyear period after dissolution allowed by law "for the purpose of enabling those charged with the duty to settle up its affairs") was in fact and in law a sale by such corporation or by its creditors and stockholders through their trustees, and we hold that it was a sale by the corporation.  Nor do we find any difficulty in the light of our decision in the Gonzolus Creek Oil Co. case, in so finding and holding because, as we have shown above, the question at issue and determined in each instance is of a wholly different nature under circumstances entirely dissimilar.  *619  But in the discussion of the earlier case, we found occasion to cite and quote *2843 . Here again the circumstances differ, the issue being whether the dissolution of a Texas corporation was, under certain conditions, an act of bankruptcy, and the court held in that case that it was such an act.  But in reaching this conclusion the court said: We do not think that there is any merit in the suggestion that the transaction alleged was one by the corporation's stockholders, and was not one by the corporation, because not effected by the officers or agents of the corporation having authority to bind it.  An effect of the statute is to make the corporation's stockholders the agency by which a conveyance or transfer of its property and an appropriation of it to raise funds to pay its debts, share and share alike, are accomplished.  The transfer was as effectually that of the corporation as it would have been if made in the name of the corporation, by its officers or agents ordinarily vested with authority to take such action in its behalf. (Italics supplied.) This is an essential part of the reasoning by which the court arrived at the conclusion that the dissolution*2844  was an act of bankruptcy on the part of the corporation, and since the court's decision is based on circumstances and conditions identical with those under consideration in the case before us, it is applicable here.  The respondent introduced in evidence a paper which purports to be the original page 104 from the ledger of the Gas Company containing an account, from December 15, 1919, with the Magnolia Company.  The ledger is not a book of original entry and consequently many of the entries contained on this page are "blind" in that they convey no information regarding the nature and purpose of the amounts entered, beyond posting references to either the cash book or journal, neither of which books is in evidence.  Such inferences as may properly be drawn from this ledger page do not, however, support the contention of the petitioners that this account was nothing more than a "memorandum." The internal evidence contained in the entries in the sheet indicates that it is, almost beyond peradventure, an integral and necessary part of the bookkeeping system of the Gas Company and that without it and the entries contained in it, the books of account of that corporation would be "out*2845  of balance," an accounting condition which negatives completely the contention that this account was a "memorandum" only.  The conclusion to be drawn from such inferences, so far as they may be held to warrant any conclusion at all, is that at the date of the dissolution the Gas Company was by its own books admittedly indebted to the Magnolia Company in an amount undeterminable from the record, for certain runs of oil, less the expenses thereof, dating from December 15, 1919.  Such evidence is not of great importance, *620  but it shows that in addition to the "unsettled claim of the Government for income taxes" admitted by the witness, Mantor, there was at least this other debt to the Magnolia Company at the date of dissolution, though by reason of the blind nature of the entries there is no disproof of the contention of the attorney for the petitioners, "that the proceeds of said runs were never paid by the Taylor Oil & Gas Company to the Magnolia Petroleum Company," nor is there, on the other hand, any proof of the accuracy of that statement beyond the bookkeeper's testimony that the money was not paid over to the Magnolia Company "at that time," - it rests wholly upon the*2846  conclusions reached in the petitioners' brief, for it is admitted that it was paid "when they sold the properties to the Magnolia Petroleum Company." In either case it would have no effect upon our decision, nor do any of the remaining propositions advanced on behalf of the petitioners.  We therefore do not discuss them.  We have not been influenced by the fact that this case arises from an admitted and avowed attempt to escape taxation as a corporation.  While, in the face of such avowal, it is the duty of this Board to look to the substance, it would be our duty as well to uphold the taxpayer in such an attempt if lawfully devised and in effect successful.  We do not question the propriety of this effort, but, as we have said, we hold it unsuccessful for the several reasons that we have discussed at some length.  In conclusion, we find (1) that the sale in question was a sale by the Gas Company to the Magnolia Company; and, by stipulation, (2) that the amount of corporation tax arising from such sale and incurred by the Gas Company for which the petitioner transferees are liable, is $34,398.83; (3) that such transferees and petitioners as are known to this Board are: Robert Scott*2847  Dilworth, Gonzales, Tex.; Coke Emory Dilworth, Gonzales, Tex.; Brank R. Womack, Taylor Tex.; George Mendel Booth, Taylor, Tex.; James A. Thompson, Taylor, Tex.; Oscar E. Roberts, Taylor, Tex.; Thomas E. Burns, San Antonio, Tex.; Charles H. Burns, San Antonio, Tex.; J. Vernon Stiles, Taylor, Tex.; Eliza Stiles, Taylor, Tex.; Edmond Doak, Taylor, Tex.; Howard Bland, Sr., Taylor, Tex.; Steve G. Gernert, Taylor, Tex.; Will R. Bulaney, Houston, Tex.; and Charles H. Cooke, San Antonio, Tex.The transferees presented no evidence, other than the notices mailed to them by the Commissioner, as to the amount of the liability of each of them.  The total of the several amounts claimed by the Commissioner to be due from the petitioner transferees is $53,000, while the deficiency in respect to the tax of the Gas Company is $34,398.83.  Judgment will be entered under Rule 50.Footnotes1. The cases of the following petitioners, as transferees of the Taylor Oil & Gas Co., were consolidated for hearing and decision with that of the Taylor Oil & Gas Co. and are decided herewith: Robert Scott Dilworth, Docket No. 25237; Coke Emory Dilworth, Docket No. 25238; Frank R. Womack, Docket No. 25311; George Mendel Booth, Docket No. 25312; James A. Thompson, Docket No. 25313; Oscar E. Roberts, Docket No. 25314; Thomas E. Burns, Docket No. 25315; Chas. H. Burns, Docket No. 25316; J. Vernon Stiles, Docket No. 25317; Eliza Stiles, Docket No. 25318; Edmond Doak, Docket No. 25319; Howard Bland, Sr., Docket No. 25320; Steve G. Gernert, Docket No. 25321; Will R. Dulaney, Docket No. 25322; and Chas. H. Cooke, Docket No. 25343. ↩