Leighton

This is an appeal from a decree rendered by the District Court in favor of the United States against the appellants. The appeal is heard upon the judgment roll.

Leighton & Co., Incorporated, was a California corporation engaged in business in San Francisco during the years 1918, 1919, and 1920, for which years it filed federal income and profits tax returns. The corporation claimed the right to be taxed as a “personal service corporation” under certain sections of the Revenue Act of 1918 ( 40 Stat. 1057 ).

On February 21, 1921, the corporation disposed of its business and other assets for $12,000 in cash, and distributed the same to its stockholders, in proportion to their respective ownership of shares. This distribution left the corporation without means wherewith to pay taxes due to the appellee.

The court found that the “corporation entered into written waivers with the Commissioner of Internal Revenue by which the period for assessment against it of additional income taxes for the calendar years 1918 and 1919 was duly extended to March 3, 1926.”

On January 16, 1926, the Commissioner of Internal Revenue assessed additional taxes against the corporation for the taxable…