The opinion
*1224 OPINION.
Smith :
The petitioners claim to have been affiliated from November 1,1918, to November 30, 1921. The respondent has denied affiliation prior to January 8, 1921. In support of his denial of affiliation the respondent calls attention to the decisions of the Board in Appeal of Watsontown Brick Co., 3 B. T. A. 85; George A. Fink Co. v. Commissioner, 5 B. T. A. 76; and others.
In Appeal of Hagerstown Shoe & Legging Co., 1 B. T. A. 666, we stated:
Are we, in applying this statute, to look at the tabulated statement of stock ownership and, because it there appears that several persons are stockholders of one or the other legal entity and not of both, say that this alone is determinative? We have had occasion in other appeals on other questions to say, and we can not too often repeat, that all facts must be considered. These problems are not flat mathematical or legalistic puzzles; they are vital, and must be examined in three dimensions with the light of reality. No solution otherwise arrived at could long survive.
In the case at bar we have a situation where all of the stock of two corporations is owned by closely related interests. The only important outside interest was a brother-in-law of the principal stockholder of both corporations who had formerly been associated in the • business. The two businesses were operated as an economic unit and the Gage Hat Works was considered a department of the older corporation. This is conclusively proven by the fact that when it developed that Gage Brothers & Co. were receiving all of the profits of the business the stockholders of the Gage Hat Works were permitted to exchange their shares of stock for shares of stock of Gage Brothers & Co. upon precisely the same basis as though Gage Brothers & Co. had been correspondingly profitable with the parent company. In our opinion all of the stock of both corporations was owned or controlled by the same interests.
Reviewed by the Board.
Judgment will Toe entered for the petitioners on 15 days’ notice, under Rule 50.