The opinion
Green:
The petitioner has appealed from the determination of a deficiency in income and profits taxes, in the sum of $2,168.67, for the calendar year 1919. The petitioner filed its return as a personal service corporation but the Commissioner determined that it was not entitled to classification as such and recomputed the tax.
FINDINGS OF FACT.
Frank B. Gilbreth, Inc., is a domestic corporation with offices at 77 Brown Street, Providence,, R. I. Its business is described as “ Consulting Engineering in Management.” The company was organized on December 17, 1913, and its entire capital stock, consisting of ten shares of the par value of $100 each, was issued to Martha B. Gilbreth. Shortly thereafter all of said stock ivas assigned to Lillian M. Gilbreth and she continued to hold and own all of the stock down to and including the year 1919.
Lillian M. Gilbreth and her husband, Frank B. Gilbreth, devoted their entire time to the operation of the company and the services rendered by each were of equal value. Mrs. Gilbreth, in the year 1919, received a salary of $7,250. The names of other employes and amounts of salary paid them during the year were as follows:
Frank B. Gilbreth_$7, 750.00
E. J. Terry_ 3, 330. 00
Nathaniel Major, Jr_ 3, 300.00
John B. Bentleyl_ 1, 887. 29
No dividends were ever paid on the stock. The gross income as shown by the return was $48,934.68, of which amount $48,730.17 was received as compensation for services rendered, $118.39 as interest, and $86.12 as. interest on Liberty bonds. The expenses deducted in the return were as follows:
*953 Office_$9,995.68
Office salaries- 1, 068.74
Salaries of those engaged in personal service_ 24,164. 59
Expenses of those engaged in personal service_ 487.10
Laboratory expenses_ 1, 553. 95
Salaries, laboratory men_ 977. 60
Advertising- 277. 90
The inventory of the company was made up of office furniture, printing devices, motion picture machines and equipment, and was valued by the petitioner at $1,356.30. It had additional cash in banks $3,942.54, and Liberty bonds $12,150, making a total of assets of $11,448.84.
The petitioners employed a number of young engineers some of whom were regarded as students. The record is not clear as to the amounts earned by or paid to these employes.
Judgment for the Commissioner.