
    Appeal of De MARTINI-ZEREGA AGENCY CO.
    Docket No. 4562.
    Submitted October 15, 1925.
    Decided February 9, 1926.
    
      T. Francis Campbell, G. P. A., for the taxpayer.
    
      J. Arthur Adams, Esq., for the Commissioner.
    Before Marquette and Love.
    This is an appeal from the determination of deficiencies in income- and profits taxes for the calendar years 1919, 1920, and 1921, in the-total amount of. $4,367.62.
    The question is whether the taxpayer is entitled to classification as a personal service corporation.
    FINDINGS OF FACT.
    The taxpayer is a Missouri corporation, with principal office in St. Louis.
    It was organized in September, 1915, with capital stock of $5,000, consisting of 100 shares of $50 par value each, which were owned as follows:
    Shares.
    James J. De Martini_ 51
    Louis Zerega_ 44
    Victor Zerega_ 5
    All three of the stockholders were employed as officers of the taxpayer and devoted all of their time to its activities. The only other employee was a woman bookkeeper-stenographer.
    De Martini worked in the office most of the time, making contracts for loans and insurance, buying real estate for clients, soliciting insurance and selling property. The two Zeregas attended to ’the collecting of rents, soliciting insurance, and selling real estate, and also-attended to repairs for clients. For the last-mentioned, the commission received was 10 per cent of the bill.
    '■.The income of the taxpayer was derived from commissions on insurance, on sales of real estate, on the collecting of rents, on the-making of loans, and on the making of repairs, and from the gain on the sale of real estate and from interest on loans.
    The actual income.for the years in question, was:
    
      
    
    
      The expenses for the years in question were:
    
      
    
    The balance sheets of the taxpayer at the closing of each calendar year showed:
    
      
    
    In making loans to clients, the taxpayer either used its own funds, used the funds of other clients, who advanced the money to the taxpayer for the purpose, or borrowed the necessary money from banks. It charged commissions for arranging loans of funds other than its own. The largest amount owed by the taxpayer to banks at any one time during 1919 was from $3,000 to $4,000. In its insurance business, the taxpayer paid the insurance companies the premiums monthly, whether collected or not.
    The sales of real estate in which the taxpayer participated on its own account during the years in question were:
    
      
    
    
      Capital, invested and borrowed, was a material income-producing factor.
   DECISION.

The determination of the Commissioner is approved.  