The individuals elected as directors and officers of petitioner also held the following positions 1957 U.S. Tax Ct. LEXIS 3">*5 with General Shoe Corporation, hereafter referred to as General, during the period September 30 through December 31, 1948:

W. Maxey Jarman, chairman

W. M. Blackie, vice president

E. D. Woods, assistant comptroller

J. R. McCollum, employee

F. M. Weisiger, employee

B. P. Weisiger, employee

E. L. Britain, employee

W. Givan, employee

E. C. Jones, employee

K. Lawrence, employee

P. C. Runyon, employee

G. O. Petway, employee

Petitioner's authorized capital stock consisted of 1,000,000 shares, par value $ 1. The board of directors had discretionary authority to issue capital stock in such amounts and for such considerations as it determined. On October 21, 1948, the directors issued stock certificate No. 1 for 1,000 shares in the name of Sarah A. Jarman, wife of W. Maxey Jarman.

On November 1, 1948, the stock certificate issued in the name of Sarah Jarman was transferred to General. General issued its check for $ 1,000 in payment for the stock. The stock certificate endorsed on November 1, 1948, over her signature discloses an irrevocable transfer for value received.

The stock certificate issued in the name of Sarah Jarman for 1,000 shares and a stock certificate for 10 shares, par1957 U.S. Tax Ct. LEXIS 3">*6 value $ 100, issued to General under date of February 6, 1950, represented the only shares issued by petitioner. The stock certificate issued in the name of General replaced the certificate issued in the name of Sarah Jarman. General then owned all of the outstanding stock of petitioner. At that time individuals owning directly or indirectly 50 per cent or more in value of the outstanding stock or outstanding voting stock of General indirectly owned all outstanding stock of petitioner.

During November 1948, petitioner acquired from General several retail stores in Ohio. This acquisition consisted of assets acquired 29 T.C. 632">*634 for their book value on the books of General, and for which General extended credit to petitioner on open account. The assets consisted of the following:

The leasehold improvements had an adjusted basis for determining gain upon sale or exchange on December 1, 1950, of $ 51,916.99. It is stipulated that furniture and fixtures were also acquired, but no monetary value is assigned thereto.

The assets held by petitioner on December 1, 1950, consisted of the following: 1957 U.S. Tax Ct. LEXIS 3">*7

The adjusted basis for determining gain upon sale or exchange of leasehold improvements on December 1, 1950, was $ 264,741.99.

Petitioner acquired a substantial part (all) of its assets from General during November 1948.

When General transferred the assets to petitioner, it owned all of the outstanding capital stock of petitioner. General commenced business in 1925 and has continuously engaged in business since that time.

Petitioner computed its excess profits tax for the fiscal year ended October 31, 1951, as a new corporation pursuant to section 430 (e) (1), I. R. C. 1939. Respondent determined that petitioner was not entitled to compute its excess profits tax for that fiscal year as a new corporation.

Petitioner is not a new corporation and did not commence business after July 1, 1945, within the meaning of section 430 (e), I. R. C. 1939, and is not entitled to compute its excess profits tax pursuant to the alternative method prescribed in section 430 (e) (1), I. R. C. 1939, relating to new corporations.

OPINION.

Petitioner claims to be entitled to the preferential 1957 U.S. Tax Ct. LEXIS 3">*8 tax treatment accorded "a new corporation" under section 430 (e), I. R. C. 1939, as added by the Excess Profits Tax Act ¹ of 1950. The 29 T.C. 632">*635 facts are not in dispute. Petitioner acquired all of its assets from its parent, General, and while petitioner concededly commenced business after July 1, 1945, General had been operating since 1925. Petitioner says that its stock was owned by General and not by General's stockholders, and respondent insists that the rule of attribution requires that petitioner's stock be considered as being held by General's stockholders.

1957 U.S. Tax Ct. LEXIS 3">*9 What the issue really comes down to is whether the formula of section 503 can and must be imported into section 430 (e). The statute says in effect that corporations can qualify under section 430 (e) as having "commenced business" only if they would likewise so qualify as described in section 445. ²1957 U.S. Tax Ct. LEXIS 3">*10 Section 445 expressly requires for its application the use of the principle of section 503. ³ We fail to 29 T.C. 632">*636 see, therefore, how a corporation can have the benefits of not having commenced business before July 1, 1945, under section 445 without applying section 503; and if not a corporation which commenced business after 1945 under section 445, it does not qualify for the benefits of section 430 (e), where section 445 (g) applies as it does here.

In order to clarify what we think is the consequently inevitable effect of the interconnected statutory provisions, we set forth below a paraphrased version of the interplay of the three sections and their application to petitioner's situation:

In the case of * * * [petitioner if it] commenced business [as limited below] after July 1, 1945, and * * * [its] fifth taxable year ends after June 30, 1950, the amount * * * [of excess profits tax] shall be ⁴ [computed at a preferential rate.]

[Petitioner] * * * shall be considered to have been in existence and to have had taxable years for any period during1957 U.S. Tax Ct. LEXIS 3">*11 which [General] * * * was in existence, and * * * [petitioner] shall be [then] considered to have commenced business [in 1925,] ⁵ * * * the earliest date on which * * * [General] commenced business: ⁶ [if General] * * * during or prior to the [year ended October 31, 1951] * * * was a party with * * * [petitioner] to a transaction described * * * ⁷ [as:]

The acquisition by * * * [petitioner] of * * * its assets from * * * [General], if * * * the outstanding stock * * * of * * * [petitioner] is * * * [considered as] owned, at the time of such acquisition, by individuals owning * * * [proportionally] 50 per centum or more in value of the outstanding stock * * * of * * * [General; ⁸ by reason that] stock [of petitioner] owned, * * * by * * * [General] * * * shall be considered as being owned proportionately by [General's] shareholders * * * ⁹

1957 U.S. Tax Ct. LEXIS 3">*12 We think it inevitably follows that respondent is correct that petitioner cannot qualify as having commenced business after July 1, 1945; that section 430 (e) is accordingly inapplicable, and that, as a consequence, the deficiency was correctly determined. With such a clear statutory command, the legislative history is not available even were it more persuasive than is the present case. John H. Watson, Jr., 27 B. T. A. 463, 465.

Decision will be entered for the respondent.