Vanadium Metals Co. v. Commissioner , 14 B.T.A. 937 ( 1928 )

VANADIUM METALS CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

J. ROGERS FLANNERY & CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

FLANNERY BOLT CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Vanadium Metals Co. v. Commissioner

Docket Nos. 14983, 14984, 17190.

United States Board of Tax Appeals

14 B.T.A. 937; 1928 BTA LEXIS 2882;

December 27, 1928, Promulgated

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">*2882 The petitioners were not affiliated with each other or with any other corporations during the tax years involved.

Kenneth N. Parkinson, Esq., j. Rogers Flannery, Esq., and John K. Hulse, C.P.A., for the petitioners.

Eugene Meacham, Esq., and C. W. Lowry, Esq., for the respondent.

---

SMITH

">*937 These proceedings, consolidated for the purpose of hearing and decision, are for the redetermination of deficiencies in income and profits tax as follows:

Vanadium Metals Co., Docket No. 17190, for the calendar year
1917 and for the fiscal period January 1 to September 30, 1918,
and for the year ended September 30, 1919	$5,128.65
J. Rogers Flannery & Co., Docket No. 14983, for the calendar
year 1919	1,301.03
Flannery Bolt Co., Docket No. 14984, for the calendar year 1920	10,545.99

Most of the issues involved were settled by stipulation of the parties at the hearing. The question of an allowance of $40,109.09 for amortization or exhaustion in 1919 of the cost to the Flannery Bolt Co. of the selling contract purchased by it from J. Rogers Flannery & Co. for $112,500 is to be held in abeyance pending decision of the Board">*2883 upon the question of affiliation of a group of companies at which time it will be covered in the redetermination submitted under Rule 50 of the rules of the Board. The issue submitted to the ">*938 Board for determination at this time is the affiliation of the following companies for all the years involved:

Flannery Bolt Co.

J. Rogers Flannery & Co.

Vanadium Metals Co.

Electro Vanadium Reduction Co.

American Vanadium Co.

Keystone Nut Lock Mfg. Co.

Vanadium Chemical Co.

Collier Land Co.

The petitioners submit that all of these companies were affiliated during the taxable periods involved; the respondent denies that any one of these companies was affiliated with any other.

FINDINGS OF FACT.

1. On February 13, 1904, a small group of friends and business associates presided over by James J. Flannery and Joseph M. Flannery, brothers, and J. Rogers Flannery, son of James J. Flannery, organized the Flannery Bolt Co. under the laws of Pennsylvania, for the purpose of acquiring from one John B. Tate his patent rights to the Tate Staybolt and for the purpose of manufacturing and selling the bolt. This group of men had long been associated in various enterprises and">*2884 were particularly interested in the development of new enterprises holding forth prospects of ultimate financial success.

2. The Staybolt was designed and patented to relieve a need in the locomotive industry in that theretofore the bolt or brace supporting or holding the upper and lower portions of the water compartment of a locomotive was rigid, with the result that expansion and contraction resulting from the heating process frequently either broke the bolt or pulled it from its socket, cracking the boiler plate and thus damaging the boiler materially, necessitating frequent inspections and repairs.

3. The Flannery Bolt Co. at first had others do its manufacturing. In 1904, however, it acquired a factory site at Bridgeville, Pa., at a point approximately 12 miles from Pittsburgh, and erected suitable buildings thereon.

4. In order to insure a widespread interest among locomotive manufacturers and railroad companies, certain key men in those and allied industries, friends of the Flannerys widely scattered throughout the country, were invited to and did become stockholders, each individual being permitted to acquire but a few shares of stock and only upon the personal">*2885 invitation or solicitation of one of the Flannerys. In some instances the stock was sold for cash; in others for services rendered. The purpose in the mind of the Flannerys in permitting these key men to become stockholders was to obtain their cooperation in furthering the widespread use of the Staybolt.

">*939 5. A block of stock was also set aside for the principal employees of the Flannery Bolt Co. upon preferential terms, thus stimulating their interest, the selection thereof and financial arrangements therefor being handled by James J. Flannery, who was elected president of the company. Others of the original group served as officers and directors.

6. From the beginning of this Company, James J. Flannery was looked upon as the guiding genius. He was the most important man in the organization up to the date of his death March 6, 1920. While consulting his associates freely, he nevertheless determined every policy of the company. Directors' meetings were held regularly but consisted mostly of ratifying the acts and recommendations of James J. Flannery.

7. In the selection of employees to occupy principal positions, etc., James J. Flannery consulted no one">*2886 and these employees reported to and received their instructions from him alone. Written contracts for the erection of buildings, etc., were considered by him unnecessary, such work in all instances being placed in the hands of his friend, C. H. Kerr, a contractor in whom James J. Flannery had absolute confidence. Flannery determined and supervised every policy and act of the company from the beginning until his death, receiving always the complete support of his associates and stockholders.

8. With but minor exceptions, stockholders never attended the annual meetings, but returned proxies to James J. Flannery or some one designated by him, such proxies being prepared by him or under his direction, designating in advance the substitute, and never was an exception taken thereto. No reports of any nature or description were ever submitted to stockholders.

9. In 1905 the Flannery group which founded the Flannery Bolt Co. became interested in and acquired vanadium properties in Peru, and, on February 15, 1906, organized the American Vandium Co. under the laws of New Jersey for the purpose of mining and smelting vandium, which is an alloy for mixture with steel and other metals.

">*2887 10. The officers and directors of the Flannery Bolt Co. became the officers and directors of the American Vanadium Co., with James J. Flannery as president. A factory was erected at Bridgeville, Pa., adjoining the plant of the Flannery Bolt Co., and on the property of the Flannery Bolt Co., thus enabling the joint use of facilities, men, and equipment. The offices of the companies were maintained together, using joint space, equipment, and men.

11. The stockholders of the Flannery Bolt Co. were invited by the Flannerys to become stockholders in the American Vanadium Co.">*940 and practically without exception took advantage of the opportunity. In addition, individuals occupying key positions in the locomotive and steel industries who had been unable to acquire stock in the Flannery Bolt Co., were invited to and did become stockholders, either in their own names or in the names of members of their immediate families, in the American Vanadium Co., with the same restriction as to amount, etc.

12. In each instance the Flannerys represented to prospective stockholders, invited to become such by them, that the Flannerys were in the market for their stock if in any case">*2888 they should become dissatisfied and wish to dispose of it. As a result of this policy shares of stock of the American Vanadium Co. and of the Flannery Bolt Co., and of companies later to be mentioned, were never sold in the open market.

13. The same policy as to the management and conduct of affairs as in the Flannery Bolt Co. was pursued by James J. Flannery in the American Vanadium Co., and with equal force and effect.

14. With the formation of the Flannery Bolt Co. and the American Vanadium Co., the dominating group set out on a program of expansion. From these two companies all other companies mentioned hereinafter were organized, with the object either of fostering the greater use and development of vanadium and of/or fostering some line of development closely allied to the Staybolt or of increasing the sales of either or both.

15. Always in the development of these later organizations James J. Flannery, Joseph M. Flannery, or J. Rogers Flannery stood out as the moving or controlling factor, but over all stood out the personality and leadership of James J. Flannery.

16. The remaining companies were organized in manner and form as follows:

(a) The Keystone Nut">*2889 Lock Manufacturing Co. was organized February 13, 1907, under the laws of New Jersey, by the same group which founded the Flannery Bolt and American Vanadium Cos., for the purpose of manufacturing and selling nut locks for use on locomotives, with an authorized capital stock of $200,000, divided into 2,000 shares of $100 par value. The manufacturing of this nut lock was done by and in the Flannery Bolt Co. plant. Sales were handled through J. Rogers Flannery & Co. This company proved unsuccessful, and since 1908 has been in effect nothing more than a holding company.

(b) From 1906 to 1908 J. Rogers Flannery served in the capacity of sales manager of the Flannery Bolt Co. In 1908 he secured from that company an exclusive selling contract for the life of the Tate Bolt Patents on the basis of a set commission per bolt, irrespective ">*941 of the selling price thereof. Upon the receipt of this contract he incorporated the J. Rogers Flannery Co., and to it assigned his selling contract, in consideration of its capital stock. A portion of this stock he issued to employees of the company without consideration, in order to stimulate their selling activities. A portion likewise">*2890 was presented as a gift to his father and his wife. The balance he retained in his own name. J. Rogers Flannery was the president of this company. His vice president was also vice president and general manager of the Flannery Bolt Co. Advertising, etc., was prepared and distributed by the Flannery Bolt Co. at the expense of J. Rogers Flannery & Co. Contracts for the purchase of bolts were secured by representatives of this company in the name of the Flannery Bolt Co.

(c) The Vanadium Metals Co. was organized on October 7, 1909, under the laws of New Jersey, with an authorized capital stock of $300,000, divided into 2,000 shares of common and 1,000 shares of preferred stock, each of $100 par value, and both having equal voting rights. This company was formed to manufacture bronze products, using vanadium as an alloy with other metals. The moving spirit behind the organization of this company was J. Rogers Flannery. Upon its formation this company purchased the secret processes for incorporating vanadium into composition metals owned by the Victor Metals Co., of East Braintree, Mass., and the small foundry in which the latter was operated. This company made a long-term contract, ">*2891 which is still in existence, with the New London Ship & Engine Co., a subsidiary of the Electric Boat Co., and the Submarine Boat Corporation, which built submarines at Groton, Conn. Under the terms of this contract a large foundry was built by the Vanadium Metals Co. on the leased property of the New London Ship & Engine Co., to and for the requirements of the latter company, and the small foundry at East Braintree, Mass., was disposed of. The executive, selling, accounting, and purchasing offices of this company were located in the general offices of the Flannery interests. The location of the plant in Groton, Conn., rather than in Bridgeville, Pa., with the other Flannery plants, was due to the enormous requirements of the New London Ship & Engine Co. for the product of this company and to the necessity of being in close proximity to that company's plant. As in the other companies, the same small group of men who founded the Flannery Bolt and American Vanadium Companies were the dominant factors. Again the same stockholders of the Flannery Bolt Co. and the American Vanadium Co., together with other "key men," were invited to, and most of them did, become stockholders in the">*2892 new company. Since the very purpose of the organization of this company was to expand the use of vanadium, all of its vanadium was purchased from the American Vanadium Co.

">*942 (d) The Vanadium Chemical Co. was organized on March 15, 1910, under the laws of Delaware, with an authorized capital stock of $500,000, consisting of 5,000 shares of a par value of $100 per share. This company was organized for the purpose of manufacturing and selling certain vanadium compounds for medicinal and pharmaceutical purposes, the American rights to which had been acquired by Joseph M. Flannery from the French discoverer thereof. This company also acquired from James J. and Joseph M. Flannery certain hotel properties located at Cambridge Springs, Pa., which hotel was operated as a sanatorium in connection with the use of curative vanadium compounds. Its capital stock was owned by those invited to become such, the same as was the case in the prior companies organized.

(e) The Collier Land Co. was organized on April 12, 1910, under the laws of Pennsylvania, with an authorized capital stock of $500,000, divided into 10,000 shares of $50 each. This company was organized as a holding">*2893 company of the real estate of all of the different corporations comprising the Flannery interests, and for the further purpose of erecting an office building into which all of the companies might maintain their offices, etc. In addition it erected houses adjacent to the Flannery Bolt and the American Vanadium Co. plants for sale or rent to the employees of these or other of the Flannery companies. Most of its capital stock was owned by the Flannery Bolt and the American Vanadium Cos. during the years in question, and in almost equal proportions. The outstanding capital stock during the years 1917 to 1920, inclusive, was $405,300, and consisted of 8,106 shares held as follows:

Stockholders	Shares
James J. Flannery	2
Joseph M. Flannery	2
J. C. Gray	2
American Vanadium Co	4,000
Flannery Bolt Co	4,100

The surplus account of the Collier Land Co., as shown on its books, was as follows:

Dec. 31, 1916	$110,446.64
Dec. 31, 1917	126,638.19
Dec. 31, 1918	136,792.02
Dec. 31, 1919	143,795.76
Dec. 31, 1920	155,029.30

The Collier Land Co. paid no dividends at any time.

(f) The Electro Vanadium Reduction Co. was organized in July, 1914, ">*2894 under the laws of Delaware, for the purpose of using vanadium in babbitt and other bearing metals. It had an authorized capital stock of $100,000, divided into 1,000 shares of $100 par value per ">*943 share. The operations of this company were carried on in the factory of the Flannery Bolt Co. and financed by the Vanadium Metals Co.

17. The stockholdings of the companies at December 31, 1917, are shown in percentages by the following table. There is no material difference in the percentages of these groups from December 31, 1916, to December 31, 1920, inclusive, except in the case of the American Vanadium Co., where the percentage owned by the Flannery family, officers, directors, and incorporators increased from 67.65 per cent at December 31, 1917, to 68.52 per cent at December 31, 1918; to 74.28 per cent at December 31, 1919; and to 79.87 per cent at December 31, 1920, and in the case of J. Rogers Flannery & Co., where the percentage owned by the same group increased from 91.33 per cent at December 31, 1917, to 100 per cent at December 31, 1918, and remained at that percentage thereafter. The first column shows the stockholdings by the Flannery family, officers, directors, ">*2895 and incorporators. This group consists of stock held in the name of 77 individuals. The second column shows stockholdings by employees of the various corporations and consists of stock held in the name of 58 individuals. The third column, called by the petitioners "Investing Associates," shows stockholdings of key men in different industries invited to become stockholders by the Flannerys and persons receiving stock for patents, formulae, etc. Stock held by this group was held by 178 different individuals. The fourth column shows stockholdings by different companies of the total group claiming affiliation. The fifth column shows stock held in the name of 18 different individuals who have not been identified as members of any other group.

	Flannery				Uniden-
	family,		"Invest-	Inter-	tified
	officers,	Em-	ing asso-	company
	directors,	ployees	ciates"
	and incor-
	porators
	Per cent	Per cent	Per cent	Per cent	Per cent
Flannery Bolt Co	49.94	10.08	37.45	0.97	1.56
American Vanadium Co	67.65		25.42		.95
Keystone Nut Lock Manufacture	45.40	.50	1.35	52.75
J. Rogers Flannery & Co	91.33	8.67
Vanadium Metals Co	69.09	3.03	26.83	1.05
Collier Land Co	.07			99.93
Vanadium Chemical Co	48.18	1.45	34.20	14.18	1.99
Electro Vanadium Reduction Co	100

">*2896 The Flannery Bolt Co. owned 52.75 per cent of the capital stock of the Keystone Nut Lock Manufacturing Co. at the end of each of the years 1917 to 1920, inclusive. The Flannery Bolt Co. owned 49.34 per cent and the American Vanadium Co. 50.59 per cent of the capital stock of the Collier Land Co. at December 31, of each of the years 1917 to 1920, inclusive.

">*944 18. Intercompany relationships were as follows:

(a) Prior to the erection of the Flannery Building in 1912, all of the companies composing the Flannery group occupied joint offices in the Frick Building, Pittsburgh. Subsequent to the erection of the Flannery Building by the Collier Land Co., all the companies occupied joint offices on the third floor of that building, such an arrangement serving to facilitate convenience and at the same time making the common usage of employees and office facilities. Office rentals were determined and arbitrarily fixed by James J. Flannery, as president of the Collier Land Co. All companies used a common switchboard for telephones and common telegraph instruments, contributing a flat amount to regular service as determined by James J. Flannery. Messenger service was common">*2897 to all companies.

(b) The plant of the Flannery Bolt Co. was erected and in operation at the time the American Vanadium Co. was formed. Upon the organization of the latter company a factory was erected by, virtually extending that of, the Flannery Bolt Co. and upon the land of the Flannery Bolt Co. In 1914, the demands of the American Vanadium Co. having increased, a new plant was erected within a distance of a few hundred feet on land owned by the Collier Land Co. The Flannery Bolt Co. extended its operations to include the old plant of the American Vanadium Co. Both plants used common dining facilities, trackage, power, labor and laboratory facilities, etc. The respective plant superintendents conferred daily and frequently the Flannery Bolt Co. superintendents served as superintendents of both plants. The products of the Keystone Nut Lock Manufacturing Co. and those of the Electro Vanadium Reduction Co. were manufactured by the Flannery Bolt Co. and all companies availed themselves of the laboratory facilities of the American Vanadium Co.

(c) Upon the acquisition of the real estate of the companies the Collier Land Co. laid out a townsite adjacent to the plants of the">*2898 Bolt and the American Vanadium Companies and erected thereon company houses either for rent or sale to employees of these companies. The plans were drawn and streets named for officials of the Flannery Bolt and American Vanadium Companies. All this was done at the instigation and under the direction of James J. Flannery.

(d) Virtually all banking and financing of all companies was done at the Oakland Savings & Trust Co., which occupied the first floor of the Flannery Building, owned by the Collier Land Co. James J. Flannery was president of the Trust Co. from its organization until his death in 1920, and controlled its policies. The companies involved herein did no borrowing but were heavy depositors. Employees desiring to avail themselves of the opportunity to purchase ">*945 stock were financed by the Trust Co. at the direction of James J. Flannery, who likewise was consulted on all private loans made to employees.

(e) The companies named as parties to these proceedings made certain loans and advances to each other on open account without interest and without security. The extent of this financing was, however, unimportant.

(f) The office employees, such as accountants, ">*2899 etc., were located in the Flannery Building, generally being assigned to space without consideration to the company with whom they were officially connected and subject to call and rendering service to any and all within the group and without charge therefor except to the company or companies officially employing them.

(g) All companies purchased supplies through a common purchasing agent appointed by and responsible to James J. Flannery. Stationery, supplies, and general office equipment were used by each company and without cost other than to the American Vanadium Co. and the Flannery Bolt Co. All other supplies were charged to the consumer on a basis of consumption.

(h) Substantially the same individuals served on the various boards of directors from the beginning of the companies to and throughout the years in question, resulting in uniform control and management and the utmost informality. Directors' meetings served to ratify acts already performed or determined under the direction of James J. Flannery. Stockholders' meetings were also informal and served primarily to satisfy legal requirements and to reelect the same individuals as officers and directors. But few stockholders">*2900 ever attended and they were content to rely on the judgment of the Flannerys. The remaining stockholders took no active part whatever, being content to receive their dividend checks, and, like the others, rely on the judgment of the Flannerys. No reports of any kind were submitted to or requested by stockholders. The utmost harmony prevailed, no dissension of any kind ever having asserted itself.

OPINION.

SMITH: The petitioners claim that from January 1, 1917, to December 31, 1920, they were members of an affiliated group consisting of Flannery Bolt Co., American Vanadium Co., J. Rogers Flannery & Co., Keystone Nut Lock Manufacturing Co., Vanadium Metals Co., Vanadium Chemical Co., Electro Vanadium Reduction Co., and the Collier Land Co. Each of the petitioners has been held by the respondent to be nonaffiliated with any other company.

">*946 The applicable provisions of the Revenue Acts controlling this situation are section 1331 of the Revenue Act of 1921, and section 240 of the Revenue Act of 1918, the pertinent portions of which read as follows:

SEC. 1331. (b) For the purpose of this section a corporation or partnership was affiliated with one or more corporations">*2901 or partnerships (1) when such corporation or partnership owned directly or controlled through closely affiliated interests or by a nominee or nominees all or substantially all the stock of the other or others, or (2) when substantially all the stock of two or more corporations or the business of two or more partnerships was owned by the same interests: Provided, That such corporations or partnerships were engaged in the same or a closely related business, or one corporation or partnership bought from or sold to another corporation or partnership products or services at prices above or below the current market, thus effecting an artificial distribution of profits, or one corporation or partnership in any way so arranged its financial relationships with another corporation or partnership as to assign to it a disproportionate share of net income or invested capital. * * *

(c) The provisions of this section are declaratory of the provisions of Title II of the Revenue Act of 1917.

SEC. 240. (b) For the purpose of this section two or more domestic corporations shall be deemed to be affiliated (1) if one corporation owns directly or controls through closely affiliated interests">*2902 or by a nominee or nominees substantially all the stock of the other or others, or (2) if substantially all the stock of two or more corporations is owned or controlled by the same interests.

With respect to the year 1917, controlled by section 1331 of the Revenue Act of 1921, the respondent contends that substantially all the stock of two or more of the companies was not owned by the same interests for the reasons (1) that the companies were not engaged in the same or a closely related business; (2) that there was no artificial distribution of profits through the buying or selling of products or services (as between the companies) at prices above or below the current market; and (3) that there was no assignment from one company to the other of a disproportionate share of net income or invested capital through arrangements of financial relationships. The respondent further contends that for the years 1918, 1919, and 1920 the companies were not affiliated, since substantially all of the stock of two or more of the companies was not owned or controlled by the same interests.

For all of the years 1917 to 1920, inclusive, it is manifest that two or more corporations can not">*2903 be considered as affiliated unless "one corporation owns directly or controls through closely affiliated interests or by a nominee or nominees substantially all the stock of the others" or unless "substantially all the stock of two or more corporations is owned or controlled by the same interests."

In , we said:

The "control" referred to by section 240 of the statute is of "substantially all of the stock," not simply corporate control of the conduct of the business or ">*947 policy pursued. Cooperation in or consent to corporate control or policy, by the giving of proxies or otherwise, does not necessarily mean control or ownership of substantially all of the stock. * * *

In interpreting the statute and its kindred provision of the Revenue Act of 1918, it has been held that there must be full and complete control of substantially all the stock and that this control must be a genuine one actually exercised. ; ">*2904 ; . Control of the business of a corporation is not control of its stock, within the meaning of the statute, and where there is control of a corporation's business, but there are quiescent stockholders present, representing a sizeable minority, such business control does not amount to the control of substantially all of the stock. .

The Board has also held "the control, however, referred to in the statute, whether it be legal or otherwise, means control of the voting rights of the stock." ; ;.

In , we said:

* * * The facts that stockholders would have given proxies to the majority to vote their stock, had such request been made; that the minority stockholders were friendly to the majority; that at the time the minority purchased their stock, there was some sort">*2905 of oral understanding that the majority would be given an opportunity to buy stock which the minority might desire to sell, and other similar circumstances are not sufficient to convince us that the control of the voting rights of stock contemplated by the statute existed in this case.

In , we said:

* * * The mere fact of relationship by blood or affinity does not of itself constitute proof of control, and the same may be said of friendship. * * *

In , we said:

* * * The fact of intercompany relations, or the absence of them, without the necessary stock ownership or control as provided in the statute, is not sufficient to permit or require affiliation. * * *

In the instant proceedings the petitioners seek to make out a case of affiliation, not so much on the theory that the stock of what may be called minority interests was controlled by the majority or dominant interests, but rather on the theory that the stockholders of the various companies as a whole constituted the same interests. Counsel for petitioners in their opening statement outlined their">*2906 theory with regard to affiliation in respect of the present petitioners as follows:

* * * It is virtually a one-man layout, but we are not claiming that the one man, by virtue of his stockholdings, dominated and controlled these corporations, but we are claiming that he did so as the representative of common interests; in other words, these stockholders were all of the same interests. * * *

Counsel ">*948 also further stated:

* * * But, taken as a whole, as we expect to prove, I would say that over 95 per cent of the stockholders were invited by the Flannerys or this group, this basic group, to join these companies. Upon that basis rests our affiliation, that it is one group that was controlled by the executive, James J. Flannery, * * *

The petitioners have sought to divide the stockholders into four groups as follows:

(1) The Flannery family, officers, incorporators, and directors in the various companies involved.

(2) Employees of the Flannery interests.

(3) Flannery investing associates.

(4) Miscellaneous holdings.

The respondent has denied that these several groups constituted the "same interests" within the meaning of the statute and further that the">*2907 members of the several groups do not constitute the "same interests." Thus, it is contended that the members of the first group are not necessarily the "same interests," even if it be considered that the members of the Flannery family constitute the same interests. It is pointed out that some of the officers and incorporators of one company are not the same interests with officers and incorporators of some of the other companies. For instance, it is shown that practically 100 per cent of the stock of J. Rogers Flannery & Co. was owned by J. Rogers Flannery and other members of the Flannery family. It is also shown that 100 per cent of the stockholders of the Electro Vanadium Reduction Co. are also classed in group (1). The respondent points out, however, that only 55 per cent of the stock of this company was owned by members of the Flannery family, most of the balance being owned by certain individuals who owned no stock in J. Rogers Flannery & Co., and that there is no showing that the interests of the latter are the same as the interests of members of the Flannery family.

The respondent further contends that the Flannery family owned only the following percentages of the stock">*2908 of the several companies:

Company	Per cent
1. Flannery Bolt Co	55.9
2. American Vanadium Co	33.6
3. Keystone Nut Lock Co	45.1
4. J. Rogers Flannery Co. (J. Rogers Flannery and wife)	99.5
5. Vanadium Metals Co	55.1
6. Collier Land Co. (99.9 per cent held by companies 1 and 2 and not
susceptible of allocation)
7. Vanadium Chemical Co	30.9
8. Electro Vanadium Reduction Co	55.0

It is contended that these percentages do not represent "substantially all of the stock" of the companies and that in the absence of any showing that the Flannerys controlled the remaining stock it can not be said that the so-called "Flannery interests" owned or controlled substantially all of the stock of these companies.

">*949 Assuming, however, for the sake of argument, that the Flannery family, officers, directors, and incorporators of the several corporations claiming to be affiliated constitute the "same interests," we find the percentages of the total stock represented by this group at December 31, 1917, to be as follows:

Company	Per cent
Flannery Bolt Co	49.94
American Vanadium Co	67.65
Keystone Nut Lock Manufacturing Co	45.40
J. Rogers Flannery & Co	91.33
Vanadium Metals Co	69.09
Collier Land Co	.07
Vanadium Chemical Co	48.18
Electro Vanadium Reduction Co	100.00

">*2909 The evidence clearly shows that all of the stockholders of the several corporations held their stock absolutely. They were free to sell it whenever and to whomsoever they wished. They were under no obligation to give proxies upon this stock to the Flannerys at any time. Many of the stockholders testified that there were no "strings" attached to their ownership of their stock.

An analysis of the stockholdings by the group "employees" and by the group "investing associates" or "key men" and by the miscellaneous group of stockholders shows that in only a few instances did the individuals hold stock in more than two of the companies. The interests of the stockholders classed as "investing associates" in the Vanadium Metals Co. and in the Keystone Nut Lock Manufacturing Co. do not appear to be the same as the interests of the stockholders of the Flannery Bolt Co. The profits of one company did not necessarily mean profits for the other companies. There is nothing to show that the stockholders of the Vanadium Metals Co., who apparently were interested in that company only for the purpose of profits or dividends from that company, were particularly interested in the profits which">*2910 might be made by the Flannery Bolt Co., since such profits would not accrue directly to them. The only ground for contending that they were the "same interests" appears to be that they had a personal friendship for the Flannerys and were interested in having them succeed in all their undertakings. We are of the opinion, however, that this is not enough to constitute them the "same interests" within the meaning of the taxing statute. Although the record indicates that there were some intercorporate relationships, it does not show that the profits of any one corporation were profits of any other corporation. The charging of overhead costs to the various corporations was left to James J. Flannery and there is nothing to indicate that he did not properly allocate such costs to the several corporations.

">*950 Even if it be considered that the Flannery family, the officers, directors, and incorporators of the several corporations constituted the "same interests," we can not find that substantially all of the stock of any of these corporations was owned by the same group except in the case of J. Rogers Flannery & Co. and of the Electro Vanadium Reduction Co., and, for reasons">*2911 above stated, we are of the opinion that the stockholders of the Electro Vanadium Reduction Co., aside from members of the Flannery family (owning 55 per cent of the stock) were not the same interests with the stockholders of J. Rogers Flannery & Co.

Upon the record as made the determination of the respondent that no one of these corporations was affiliated with any other is sustained.

Judgments will be entered under Rule 50.