Stuart

Appellant sought, but was denied, recovery of income taxes alleged to be illegally exacted from it for the years 1936 and 1937, and appeals from the judgment entered in favor of appellee.

Appellant was organized under the laws of Arizona on March 29, 1934. The Articles of Incorporation provide: “That the objects and purposes for which said Corporation is formed are: To engage in, conduct and carry on the business and customary activities of a mutual benefit association within the meaning and provisions of Sections 607-608-609-610 of Chapter 14 of Article 3 of the 1928 Revised Statutes of the State of Arizona as the same now exists. * * * ”

Appellant’s by-laws classify its funds into three classes, although the distinction between two of them is not clear. It issues contracts of life insurance. It assesses members to procure funds to meet claims under the contracts. Its financial statements show a very small amount of assets, but no liabilities. In other words, there was no ordinary balance statement showing assets and liabilities. Thus, these statements, being only half of the usual balance statement, disclose no reserves whatever. Such reserves as are commonly held as…