
    Appeal of LOUIS ABRAMS.
    
      Docket No. 4659.
    Submitted October 1, 1925.
    Decided January 19, 1926.
    
      George G. Witter, Esq., for the Commissioner.
    Before Trammell and Love.
    This is an appeal from the determination of a deficiency in income tax for 1922 in the amount of $818.63. It arises from the fact that the Commissioner included in taxable income for that year $10,221.53, as profits realized in the exchange by the taxpayer of his interest in a partnership for stock in a successor corporation.
    The answer of the Commissioner admits all the material allegations of fact contained in the taxpayer’s petition, and the appeal was submitted upon the pleadings,
    FINDINGS OF FACT.
    Prior to July 1, 1922, the taxpayer owned a one-half interest in a certain partnership operated under the trade names of Metropolitan Bedding Manufacturing Co. and Metropolitan Furniture Manufacturing Co. The other partner was Max Ostrow. This partnership was terminated on June 30,1922, by the withdrawal by Ostrow of $15,000, whereupon the taxpayer became the sole owner of the business.
    
      After the termination of the above partnership, the taxpayer entered into a second partnership agreement, dated July 29, 1922. with Harry Horblit, under the terms of which the taxpayer contributed the business of the Metropolitan Bedding Manufacturing Co. and the Metropolitan Furniture Manufacturing Co., and Horblit contributed in cash and notes $15,000. The taxpayer had a two-thirds interest and Horblit a one-third interest in this partnership.
    In August, 1922, the taxpayer and Horblit entered into an agreement with Henry Rachman to form a corporation. The taxpayer and Horblit agreed to transfer the interest of the partnership to the corporation as their interests existed on July 1, 1922. The profits from that date to the date of incorporation were to be held in trust for the benefit of the three parties to the agreement. The taxpayer, in addition to his interest in the partnership, agreed to give his promissory note to the corporation for $5,000, and Rachman agreed to pay in to the corporation $25,000 in cash and notes. Tire authorized capital stock of the corporation was 750 shares, having a total par value of $75,000, and was issued as follows:
    Par value.
    Harry Horblit, copartnership interest, 150 shares_$15, 000
    Henry Rachman, cash and notes, 250 shares- 25, 000
    Louis Abrams, copartnership interest, 300 shares_ 30, 000
    Louis Abrams, note, 50 shares- 5, 000
    On the above state of facts, the Commissioner determined that the taxpayer received the equivalent of cash to the extent of $30,000 for his interest in the partnership, which the Commissioner determined cost him $19,778.47, making a difference of $10,221.53, representing taxable profit from the transaction.
   DECISION.

The determination of the Commissioner is approved.  