Parker

Flo and Elgin R. Parker are husband and wife. They formerly were equal partners in the Southern Heater Company. On October 31, 1943, they individually deeded to each of their four minor children a six and one-fourth per cent (6%%) interest in the firm, making each child a one-eighth owner. Elgin R. Parker was appointed guardian of the estates of his children by the Superior Court of the State of California in and for the County of Orange. The appellants and their children, by their father as guardian, signed a partnership agreement on February 25,1944, effective as of November 1, 1943. In April of 1946 the Southern Heater Company changed from an active manufacturing concern to a passive entity. Its operational assets were transferred to two new corporations in exchange for all of their stock, and its realty was leased to these corporations. In 1948 the Southern Heater Company was terminated. Upon dissolution, its assets were distributed pro rata to the petitioners and the four guardianship estates.

In 1947 the Commissioner of Internal Revenue sent to each appellant a delicien- *605 cy notice with respect to the income tax year 1944 on the ground that the Parker children were not…