The opinion
*1350 OPINION.
Smith :
In so far as material hereto, sections 240 (c) of the Revenue Acts of 1924 and 1926 are as follows:
For the purpose of this section two or more domestic corporations shall be deemed to be affiliated (1) if one corporation owns at least 95 per centum of the voting stock of the other or others, or (2) if at least 95 per centum of the voting stock of two or more corporations is owned by the same interests. * * *
We have found that during the years 1924 and 1925, 246 shares, or 12.3 per cent of the stock of the Action Company, the subsidiary, were held by individuals who owned no stock in the petitioner. In 1926 and 1927 several of these same individuals owned 146 shares, or 7.3 per cent, of the subsidiary corporation’s stock. They were not beneficially interested in the results of the operation of the petitioner’s business.
The Circuit Court of Appeals for the Second Circuit has held, in Commissioner v. Adolph Hirsch & Co., 30 Fed. (2d) 645, that “ the control of the stock owned by the same interest refers to beneficial interest.” That was a case coming under the provisions of section 240 of the Revenue Acts of 1918 and 1921, where the element of control of stock might enter into the determination of affiliations, but the definition of “ the same interest ” is no different under those acts from the definition under the 1924 and 1926 Acts. The prior acts make the test the ownership or control of substantially all of the stock by the same interest and the latter acts make the test the ownership of at least 95 per cent of the stock by the same interest.
Since the holders of more than 5 per cent of the stock of the Action Company were not beneficially interested in the results of operation of the petitioner, it must be held that the two corporations were not affiliated within the meaning of the taxing acts for the years 1924 to 1927, inclusive. The following decisions of the Board are controlling upon this issue: Good Manufacturing Co., 15 B. T. A. 583; Oriental Real Estate Co., 17 B. T. A. 1220; Browne, McQuaid, Probst, Inc., 17 B. T. A. 1218; John B. Morris Foundry Co., 18 B. T. A. 1055.
Judgment will be entered for the respondent.