Helvering

The facts, stipulated to, were found by the board to be as follows:

"The petitioner [Safety Electric Products Company] is a California Corporation. The Woodill and Hulse Electric Company, Inc., and the Motor and Machinists Supply Company are also-corporations organized under the laws of California.

"From January 1, 1926 to October 1, 1926, the stock ownership of these three companies was such as to permit the filing of a consolidated return under Section 240 of the Revenue Act of 1926 (See sixty day letter attached to Petition). During this latter period 99.81 per cent of the stock of the Motor and Machinists Supply Company was owned by the Woodill and Raise Electric Company, Inc.

"For the year 1926 the Safety Electric Products Company, Inc., and the Woodill and Raise Electric Company, Inc., filed an original consolidated return. On that return on Affiliations Schedule No. 3, attached to the return, the following explanatory nota-lion was made:

"`For the calendar year 1925, Woodill and Hulse Electric Co., Inc., filed a separate return, because as explained on the schedule attached to that return, there was a change in ownership. Due to non-fulfillment of contract, it was…