Blair

The petitioner and plaintiff in error was engaged in the business of buying and selling advertising space in theaters, on curtains, programs, slides, and films, for customers. Exemption from corporation taxes was sought by the plaintiff in error, on the theory it was a personal service corporation. This was disallowed by the Commissioner; the plaintiff in error appealed to the Board of Tax Appeals. This board affirmed the ruling of the Commissioner; the plaintiff took this writ of error. The ruling of the Board of Tax Appeals was rendered September 29, 1927, and involved income and profit for the years 1919, 1920, and 1921, in the sum of $44,284.55. The appeal is brought under the provisions of Revenue Act 1926, c. 27, §§ 1001, 1002, 1003, 44 Stat 9, 109, 110 (26 USCA §§ 1224-1226).

Both the Revenue Act of 1918 ( 40 Stat. 1057 ) and the Revenue Act of 1921 ( 42 Stat. 227 ) define a personal service corporation as a corporation (1) whose income is to be ascribed primarily to the activities of the principal owners or stockholders; (2) whose stockholders are regularly engaged in the active conduct of the affairs of the corporation; (3) in which capital, whether invested or borrowed,…