
    Appeal of FLORIDA GROCERY CO.
    Docket No. 151.
    The taxpayer herein is held to have been a joint venture from January 1, 1917, to May 28, 1917, and is taxable as a corporation from and after May 28, 1917.
    Submitted November 21, 1924;
    decided January 28, 1925.
    
      J. M. Jordan, G. P. A., for the taxpayer.
    
      Robert A. Littleton, Esq. (Nelson T. Hartson, Solicitor of Internal Revenue) for the Commissioner.
    Before IviNS, KorNer, and Marquette.
    From the evidence submitted and the stipulation made at the hearing the Board makes the following
    EINDINGS oe eagt.
    The Florida Grocery Co. is a corporation existing under the laws of Florida with its place of business at Palatka, in said State, and was chartered by letters patent dated April 17, 1917. It has appealed from a determination of the Commissioner in respect of income and profits taxes for the year 1917, as set forth in the deficiency letter mailed August 4, 1924.
    The Valdosta Grocery Co., Inc., is a Georgia corporation engaged in the wholesale grocery business at Valdosta, Ga., and prior to the fall of 1916 it sold merchandise through northern Florida, but due to geographical location and combination freight rates it could not withstand competition in territory south of Pa-latka, Fla., and it was deemed advisable to organize a corporation under the laws of Florida in order that carload rates could be obtained to that point. O. B. Dalton was president and principal stockholder of the Valdosta Grocery Co., Inc., in which he owned 148 of the 200 shares of stock issued and outstanding, and he interested two of his employees, E. D. Ferrell and C. B. Carsrvell, in the project to organize the Florida corporation. Due to the fact that the busy season was at hand it was desired to commence business at once; it was agreed that the interested parties should be O. B. Dalton, Valdosta Grocery Co., Inc., E. D. Ferrell, and C. B. Carswell, and that the business should be conducted under the name of the Florida Grocery Co.
    None of the parties had ready money to embark in the enterprise. Dalton and Ferrell borrowed $7,500 on their joint note, and the Valdosta Grocery Co., Inc., shipped to the Florida Grocery Co. at Palatka, Fla., flour of the value of $2,500 as its capital contribution. Carswell contributed nothing at this time but his services, and with the money and flour thus obtained business was begun under the firm name about October 1, 1916. No agreement was had at this time in respect of the proportionate interests or shares of any of the parties interested in the business, and their respective interests were not finally determined until the business was transferred to the taxpayer on May 28, 1917.
    The corporation, the Florida Grocery Co., was chartered by letters patent of the State of Florida on April 17, 1917, with an authorized capital stock of $10,000, and on May 28, 1917, held its organization meeting, elected officers, and issued its certificates of stock. The stock was issued to the incorporators in the following proportions: Thirty-three shares each to O. B. Dalton, Valdosta Grocery Co., Inc., and E. D. Ferrell, and one share to C. B. Cars-well. On the same date a bill of sale was executed by the above parties “ as copartners doing business under the firm name and style of the Florida Grocery Co.,” by which all the assets of the alleged partnership were transferred to the taxpayer, and it continued business from said date.
    The Commissioner held that the Florida Grocery Co. was an association within the provisions of section 10(a) of the Revenue Act of 1917, from January 1,1917, to April 17,1917, the date of incorporation, and that the taxpayer was taxable as a corporation for the entire year 1917.
    In computing net income the Commissioner has included items of $20 and $17.50, which taxpayer claims are erroneous. The first item results from the inclusion of a credit of $20 to loss and gain in March, 1918, and the second from an erroneous computation of salary deductions in 1917. The Commissioner has admitted these errors and that the amounts should be excluded in computing net income.
   DECISION.

The Board determines that from January 1, 1917, to May 28, 1917, the Florida Grocery Co. was a joint venture and should be taxed as a corporation from May 28, 1917, and that in computing net income for the year 1917 the amounts of $20 and $17.50, set forth in the findings of fact, should be excluded. The determination of the Commissioner is disapproved in part and the amount of the deficiency to be assessed will be settled on consent or on seven days’ notice under Rule 50.  