
    POKORNY ESTATE, INC., v. THE UNITED STATES
    [No. L-29.
    Decided June 6, 1932]
    
      
      Mr. George E. Elliott for the plaintiff.
    
      Mr. R. G. ’Williamson, with whom was Mr. Assistant Attorney General Charles B. Rugg, for the defendant. Messrs. Wright Matthews and Warren W. Cole were on the brief.
   Williams, Judge,

delivered the opinion:

The plaintiff claims that its taxes for the fiscal year ended May 31, 1923, should be computed upon a consolidated basis with M. Pokorny & Sons, Ltd., and Pokorny Realty Company, instead of upon its separate tax return, as held by the Commissioner of Internal Revenue.

If the plaintiff is entitled to affiliation as claimed, it has overpaid its taxes for the year in question in the sum of $1,063.68, and is entitled to. recover that amount with interest thereon, as provided by law.

The plaintiff during the years in question was engaged mainly, in owning and renting real estate. • The business of Pohorny Realty Company was substantially the same as that ■of plaintiff. M. Pokorny & Sons, Ltd., was engaged in conducting retail shoe stores. The capital stock of the plaintiff consisted of 1,494 shares, of the par value of $100.00 ■each.

The stock of M. Pokorny & Sons, Ltd., consisted of 450 shares of the par value of $100.00 each.

The stock of Pokorny Realty Company consisted of 1,500 shares of the par value of $100.00 each.

The stockholders of the three corporations and the percentage pf stock owned, during the taxable year 1923 was:

Pohorny Estate, Inor
Bella Pokorny Levey_!_14.86
liosa Porkony Adler___14.86
Leonora Pokorny Goldstein_14.86
Hanna.Porkony Haas___10.84
- 56. 42
Nanie Haas Pokorny_11___14. 86
‘Clark M. Pokorny__14.86
Bertha Pokorny Kamien_14. 86
-44.58

The first four named stockholders of : this corporation, owning 55.42% of the stock thereof, own. no stock in the Pokorny Realty Company.

Pohorwy Realty Co.
JSTanie Haas Pokorny_ 30
Clara M. Pokorny_ 20
Bertha Pokorny Kamien_ 20
- 70
3M. E. Levey_'_ 10
Coleman E. Adler___ 10
Julius Goldstein_'_ 10
- 30

Levey, Adler, and Goldstein, the last three named stockholders, owning 30% of the stock of this corporation, own no stock in either Pokorny & Sons, Ltd., or Pokorny Estate, Inc.

M. Pokorny & Sons, Ltd.
Nanie Haas Pokorny-,— 37. 77
Olara M. Pokorny__'---’-33.33
Bertha Pokorny Kamien--- 6. 67
-- 77. 77
Bella Pokorny .Levey — -.-7 6.67
Rosa. Pokorny 'Adler--- 6. 67
Leonora Pokorny GoldsteinJ--- 6.67
Ralph Pokorny Levey--'-:--— 2.22
- 22.23

The last four named, stockholders of this corporation, owning 22.23% of its stock, own no stock in'Pokorny Realty Company.

All the stockholders of the corporations involved' are members of a single family, being the childrén, grandchildren, sons-in-law, and daughters-in-law of oné Michael Po-korny, deceased. The stock of the corporations was never voted in the ordinary sense, all business matters relating to the conduct of the corporations being arranged as the result of friendly discussions by the stockholders at family meetings. Money was loaned between the various corporations without security or interest and properties were leased by the corporations from and to each other at rentals lower than that charged, to outsiders.

The legal questions presented in this case are discussed in the opinion in Pokorny Realty Company v. United States, L-30, decided to-day [post, p. 459], and need; not be repeated here. The facts in that case relating to the right of the three corporations to affiliation for the fiscal year ended May 31, 1923, are identical with the facts in this case. For the reasons stated in our opinion in that case it is held that the same interests did not own or control substantially all the stock of the three corporations during the taxable year ended May 31, 1923, and that plaintiff is not entitled to have its taxes for the year computed on the basis of consolidated returns for the group.

The petition will be dismissed. It is so ordered.

Whaley, Judge; LittletoN, Judge; GeeeN, Judge; and Booth, GMef Justice, concur.  