
    Thomas C. Kierulff, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 29006.
    Promulgated November 10, 1930.
    
      Louis Titus, Esq., and G. G. Dali, Esq., for the petitioner.
    
      J. E. Marshall, Esq., for the respondent.
   OPINION.

Marquette:

The evidence in this case shows in full detail the nature and effect of the transaction on which the respondent bases the income he has ascribed and taxed to the petitioner. However, it does not support the respondent’s conclusion. The testimony of both the petitioner and Titus shows that they engaged in a joint venture to acquire and exploit certain oil leases, the title to which would be taken in the name of Titus. The petitioner was, however, to have a one-fifth interest, for which he was to pay Titus when called upon so to do, but his interest was considered and recognized by both Titus and himself as existing from the beginning of the venture, and it was not changed by the fact that it was not until later that Titus called upon him for payment. The leases were acquired by Titus and were by him transferred to the Conservative Oil Co. for shares of its capital stock, and that capital stock, together with money, was subsequently conveyed to North American Oil Consolidated in exchange for shares of its capital stock. The conveyances to the two corporations were obviously nontaxable transactions under section 202 (c) (2) and (3) of the Revenue Act of 1921, and the net result of the whole venture was that Titus and the petitioner invested therein $46,250 for which they received, and divided between themselves, in proportion to their respective contributions to the investment, about 280,000 shares of North American Consolidated Oil stock. The petitioner contributed $15,250 and received 95,333 shares of stock. He realized no taxable income.

Decision will be entered under Rule 50.  