Appeal of Bay State Securities Co.

OPINION.

Trammell:

The sole question here is to determine the date of affiliation of the taxpayer with the American Insulator Co. The Commissioner alleges the date was September 15, 1919, while the taxpayer claimed the date of affiliation was December 4, 1919. The taxpayer has presented in evidence the written option, letters and communications and records of the American Insulator Co., which conclusively show that negotiations for the stock did not commence until November 9, 1919; that the taxpayer did not determine to exercise its option to buy the stock until November 26, 1919, and the determination then was subject to a further examination. The sale did not take place until December 4, 1919. Prior to that date there is no evidence of any control of the stock by the taxpayer. The option did not vest any control whatever until or unless it was exercised. We therefore hold that the affiliation took place December 4,1919.

In this case it is conceded that the corporations have not entered into an agreement between themselves as to the proportion of the tax to be assessed to each, so the tax should be allocated upon the basis of the net income properly assignable to each company in accord-anee with section 240 (a) of tbe Revenue Act of 1918, and computed on the basis set forth in the Appeal of American La Dentelle, Inc., 1 B. T. A. 575.