
    Kasigan Gas Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 11085.
    Promulgated January 16, 1928.
    
      Donald W. Stewart, Asy., for the petitioner.
    
      L. A. Luce, Asy., for the respondent.
   Lansdon :

The respondent has asserted a deficiency in income and profits tax for the fiscal year ended October 31, 1921, in the amount of $542.93. The petitioner alleges that the respondent erroneously excluded value of a certain franchise from its invested capital in the taxable year. It is alleged in the petition that some time in 1916, the petitioner acquired a mixed aggregate of tangible and intangible property of the value of $129,394.85, for which it issued its stock of the par value of $100,000, and assumed liabilities in the amount of $11,076.86. Among the property which it avers it so acquired was an unexpired franchise for the operation of a gas company in the City of Independence, Kans. In its income-tax return for the taxable year, the petitioner included such franchise at a value of $25,000 in its computation of its invested capital. Upon audit of such return the respondent disallowed the $25,000, aforesaid, as a factor of invested capital, and determined the deficiency here in question.

At the hearing the petitioner produced no corporate records or books of account in proof of the alleged transaction or of the value of any property acquired as a result thereof. Its only evidence was the oral testimony of a witness who was not a stockholder or officer of the corporation from which the assets were acquired nor connected in any way with the petitioner until some three years subsequent to the transaction. This witness testified that in his opinion the franchise was worth at least $25,000 at the date it was acquired by the petitioner.

Judgment will be entered for the respondent.  