Appeal of WILLIAM J. CONLEN 

Docket No. 815.

Capital stock of a corporation received by an individual in 1920 as compensation for services
rendered is subject to tax as income on the basis of the fair market value of such stock.
Submitted January 28, 1925; decided January 81, 1925.
William J. Conlen, the taxpayer, in his own behalf.
Willis D. Nance, Esq. (Nelson T. Hartson, Solicitor of Internal Revenue) for the Commissioner.
Before Graupner, Lansdon, Littleton, and Smith.

This appeal is taken from a deficiency in the amount of $3,021.60, determined by the Commissioner
for the calendar year 1920, and presents the question of whether capital stock of a corporation
received by an individual is taxable as income on the basis of the par value of the stock or upon
its fair market value. The Commis sioner computed the tax on the basis of the par value of the
stock. The taxpayer did not appear at the hearing. From the Commis sioner's answer and from
stipulations filed, the Board makes the fol lowing

FINDINGS OF FACT

The taxpayer is an individual residing at Merion, Pa. In 19~0, he received as compensation for
legal services stock in Chas. Cory & Son, Inc., a Delaware corporation, as follows
150 shares of class B preferred stock, par value $100. 00 26 shares of class A preferred stock,
par value 10.00
This stock was not included as income in the taxpayer's income-tax return for 1920.
The 150 shares of class B preferred stock, par value $100, have a fair market value *f $53 per
share, or a total fair market value of $7,950. The 26 shares of class A preferred stock, par
value $10, have a fair market value of $130 per share, or a total fair market value of $3,380.

DECISION

The deficiency determined by the Commissioner is approved in part and disapproved in part. The
tax will be recomputed on the basis of the fair market value of the capital stock in accordance
with the above findings and the amount of the deficiency will be finally settled on consent or 10
days' notice in accordance with Rule 50.