
    G. M. Harrington, Petitioner, v. Commissioner of Internal Revenue, Respondent. L. W. MacDonald, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket Nos. 7709, 7710.
    Promulgated January 21, 1928.
    
      H. H. Tooley, Esq., for the petitioners.
    
      J. W. Fisher, Esq., for the respondent.
   OPINION.

Teammell:

That husband and wife, under the law of California, may enter into relationship of partners and carry on business in that form is clear. Section 158, Civil Code of California. Under the law of that State no particular form of agreement is required to constitute the partnership. It was not questioned in this proceeding by the respondent that the petitioners had the right under the law of California to take their wives into the partnership with them, the only question being whether the partnership was actually formed and was in existence during the years 1920 and 1921 composed of the petitioners and their wives. The respondent has determined as a fact that the petitioners and their wives were not partners. The petitioners are required to introduce evidence to overcome the presumption of the correctness of the respondent’s determination. In our opinion, there is not a preponderance of evidence to establish the partnership relation among the petitioners and their wives. The wives took no part in the affairs of the business. There were no entries made upon the books with respect to the wives except the profits at the end of the years which were credited to their account. There is no evidence that the wives entered into the relationship of mutual agency with their husbands, or that their wives entered into such an agreement with the petitioners as to constitute them partners, and the actual conduct of the parties as well as the other evidence in the case leads us to the conclusion that the partnership was not formed until 1924, when the articles of copartnership were executed, notwithstanding the fact that this agreement was dated January 1, 1920. There is no testimony that this agreement executed in 1924 incorporated any verbal agreement which had theretofore been entered into.

In view of the foregoing, it is our opinion that the partnership relationship did not exist among the petitioners and their wives during 1920 and 1921.

Judgment will be entered for the respondent.  