reasoning of that case, which has already been distinguished in John L. Goodbody, supra, beyond pointing out that its decision can be fully supported by the fact (stated in the findings at p. 1044) that the taxpayer and his wife sought to offset against their individual ordinary income their distributive share of the partnership's net capital lossobviously a claim unallowable on grounds entirely distinct from those involved here. The language of the opinion (at p. 1046) to the effect that, in the 1934 and 1936 Revenue Acts, "Congress plainly intended that a partner should not have as a deduction against his individual. income any capital loss of the partnership," must be read in the light of the facts involved, and it is not intended to state any new principle or to limit section 117 (d) in a way which the Supreme Court has clearly said can not be imposed on its correlative section 23 (r).

A word may be added on the views of the committees of Congress which have considered revenue acts after that of 1932. In the House Report on the Revenue Act of 1934 (H. Rept. 704, 73d Cong., pp. 17-18), which is, in its relevant partnership provisions, the same as that of 1936, but introduced the new section 117 (d), there is this significant statement:

Under the bill, the partnership will be permitted to deduct losses on the sale of capital assets only to the extent of gains from such sales (sec. 117 (d)). Thus the partnership can have no capital net loss and therefore the partners can have no deduction on account of any capital loss of the partnership. In this way the main source of the tax avoidance by banking and security partnerships in the past can be eliminated.

In the House Report on the 1936 Revenue Act nothing of relevance. appears. In the House Report on the 1938 Revenue Act, however, from which we have already quoted in part, it is assumed by the committee that it is making "a departure from the principle adopted in the Revenue Acts of 1934 and 1936" in applying "the principle that only the partners, as individuals, not the partnership, as an entity, are taxable persons," and therefore, the cross deductions between partnership and partner may be allowed. Needless to say, the opinion of a committee of another Congress can have no bearing on the proper interpretation of an act; and under proper rules of construction even the opinion of a committee of the Congress passing the act upon its meaning can be resorted to only to resolve some ambiguity in the statute itself. The reasonableness of the committee's view on the 1936 Revenue Act, however, as of that time, has been well and succinctly dealt with by petitioner on brief, and we can do no better than to quote a relevant passage from his reply brief here, which we think finally disposes of any seeming anomaly between the Supreme Court's construction of the 1932 Act, which we have adopted as applicable to the 1936 Revenue Act here considered, and legislative views of a different character:

The [Tax] Court in the Wadel case also referred to the Ways and Means Committee Report in connection with the Revenue Act of 1938. It is true that the language of this report does indicate that the writers thereof thought that under the 1934 and 1936 Act partnership capital losses could not be offset against Individual capital gains. This belief undoubtedly is accounted for by the fact that at the time the committee report was written on March 1, 1938, the decisions of the lower courts on the question involved in the Neuberger and Mosbacher cases stood in the law reports unreversed and the committee draftsmen naturally accepted the lower court decisions on the question as representing a correct version of the law, and failed to anticipate the overruling of these decisions by the Supreme Court in the Neuberger and Mosbacher cases. Prior to these Supreme Court decisions in 1940 it was generally believed that in computing the income of partners and partnerships under the 1932 Act, noncapital security losses of the partnership could not be offset against the partners' noncapital security gains in view of the limitation imposed by section 23 (r) (1) of the 1932 Act. This position was taken by the Treasury Department in 1935 in G. C. M. 14012, XIV-1, C. B. 145 and I. T. 2892, XIV-1, C. B. 148. This position was supported by the decision of this Court in Percy Johnston, 34 B. T. A. 276 decided in April 1936 which was affirmed by the influential Second Circuit Court of Appeals in Johnston v. Commissioner, 86 F. (2d) 732, decided in December 1936 and in which certiorari was denied, 301 U. S. 683. The decision in the Johnston case was accepted as law and was followed by the Court of Claims in Klingenstein v. United States, 18 F. Supp. 1015, decided in 1937 and by this Court in the Neuberger case, 37 B. T. A. 223, decided on January 22, 1938, just a month before the Ways and Means Committee Report on the 1938 Act.

In spite of the language of congressional committees and of the Supreme Court in the Neuberger case above referred to, we can not, in logic, construe the decisions in the Neuberger and Mosbacher cases, and the revenue acts in such a way as to justify a conclusion that under the 1936 Revenue Act partnership capital losses may not be offset against individual capital gains, when it is clear that they may be under the 1932 and 1938 Acts, and no material differences appear in any of the Revenue Acts from 1932 to 1938 which affect the taxation of partnership income.

We, consequently, hold that petitioner should have been allowed to offset his partnership capital losses against his individual capital gains in the transactions here involved.

Decision will be entered under Rule 50.

VIVIAN B. ALLEN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 2505. Promulgated August 15, 1944.

1. In 1933, 1935, and 1941 petitioner made gifts in trust for the benefit of her granddaughter. The income of the trusts during the donee's minority was either to be used for her maintenance and support or accumulated, at the discretion of her parents or the trustees. After attaining her majority the donee was to receive the income for

life and after attaining the age of 35 years could also withdraw the
principal. If the donee should die before attaining the age of 21,
leaving no children, the principal was to go to her mother if living,
otherwise to the mother's heirs. Held, that the gifts in 1933 and
1935 were gifts or future interests; held, further, that the value of
each of the gifts was the book value of the property transferred to the
trusts at the time of such transfers.

2. The value for gift tax purposes of a block of 10,000 shares of
stock out of a total of approximately 3,500,000 of such shares issued
and outstanding, held to be the median of the high and low prices at
which 1,500 of such shares were sold on the stock exchange on the
day the gift was made.

Arthur Garfield Hays, Esq., James R. Cherry, Esq., and Julian G. Culver, Esq., for the petitioner.

William F. Evans, Esq., for the respondent.

This proceeding involves a gift tax deficiency of $7,136.24 for 1941. The questions in issue are (1) whether certain gifts in trust made in the prior years 1933 and 1935 were gifts of future interests, and (2) the value of certain shares of stock transferred to one of the trusts in 1941. Some of the facts have been stipulated.

FINDINGS OF FACT.

Petitioner is a resident of New York, New York. She filed her gift tax return for 1941 with the collector of internal revenue for the third district of New York.

On December 23, 1933, petitioner transferred to her daughter, Josephine A. Winter, 3,500 shares of stock of May Department Stores Co. in trust for Josephine Clark Winter, granddaughter of the donor and daughter of the trustee. The donee was an infant, one year of age. The agreement provided that the trustee was:

FIRST: To invest and reinvest the same, to receive the income therefrom and to pay the net income to JOSEPHINE CLARK WINTER, grand-daughter of the Grantor (hereinafter called "Grand-daughter"), monthly during her lifetime. So long as the said Grand-daughter shall be a minor, the Trustee or Trustees shall apply the net income from the Trust Fund for her use to the extent required for her education and support, as directed by the said JOSEPHINE A. WINTER, daughter of the Grantor, or after the death of the said daughter as directed by L. CLARK WINTER, father of the said Grand-daughter, or after his death in the absolute discretion of the Trustee or Trustees and they shall accumulate any surplus income until the said Grand-daughter shall attain the age of twenty-one years, at which time such surplus shall be paid to her absolutely.

After the granddaughter should attain the age of 21 years the net income of the trust was to be paid to her monthly during her life. If she should die during her minority, leaving children surviving her, the principal was to be divided in equal shares among such children, but, if no children, it was to be distributed to her mother, Josephine A.

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Winter, if living, or, if deceased, to her descendants. In the event of the granddaughter's death after attaining 21 years of age, the principal was to be distributed as directed by her in her will. In the absence of such appointment, it was to be distributed to her living descendants. It was further provided that the trust might be terminated at the pleasure of the granddaughter after she attained the age of 35 years and her portion of the principal of the trust then distributed to her.

Petitioner filed a gift tax return for 1933 in which she reported a gift of the 3,500 shares of stock at a valuation of $98,218.75. In computing the net taxable gift she claimed the statutory exclusion of $5,000.

On June 28, 1935, petitioner transferred 10,000 shares of the common stock of Commercial Investment Trust Corporation to Josephine A. Winter and the Chase National Bank of the City of New York as trustees in trust for the same granddaughter, Josephine Clark Winter. The trustees were directed:

subject to the provisions hereinafter contained for a division of the trust into shares or parts for the benefit of children born to JOSEPHINE A. WINTER, the daughter of the Grantor, subsequent to the execution of this trust, to apply the income to the support, education and maintenance of JOSEPHINE CLARK WINTER, the grand-daughter of the Grantor (hereinafter called "granddaughter"), insofar as the same may be required in the sole discretion of the Trustees, and to accumulate any surplus income until the said grand-daughter shall attain the age of twenty-one (21) years, at which time such surplus income shall be paid to said grand-daughter absolutely and thereafter to pay the income from the trust fund to the grand-daughter monthly during her lifetime.

This trust agreement further provided, as did the 1933 trust agreement, that if the granddaughter should die before attaining the age of 21, leaving surviving children, the principal was to be paid in equal shares to such children, but in case there were no surviving children it should be paid to Josephine A., Winter or her descendants. In the case of the granddaughter's death after attaining the age of 21, the principal was to be disposed of as directed in her will or, in the absence of such appointment, distributed to her descendants. The granddaughter was given the further right to have the principal of the trust distributed to her at any time after attaining the age of 40. There was a further provision in this trust agreement that the trust was to be kept open for any after-born children of Josephine A. Winter and that all such children were to share equally in the trust fund. As in the 1933 trust, the trustees were authorized to apply the income to the support, education, and maintenance of such children. Any surplus income was to be accumulated and distributed to them when they attained the age of 21. Thereafter, the income was to be paid

to them monthly for life. The principal was to be disposed of as in the case of the 1933 trust.

Petitioner filed a gift tax return for 1935 in which she reported the gift of 10,000 shares of Commercial Investment Trust Corporation stock at a valuation of $670,000. She claimed the statutory exclusion of $5,000 in her gift tax return for that year.

On August 5, 1941, petitioner transferred to the June 28, 1935, trust for the benefit of her granddaughter 10,000 additional shares of Commercial Investment Trust Corporation stock. She filed a gift tax return for 1941 in which she reported the gift of the 10,000 shares at a valuation of 28% per share. On the date of the gift 1,500 shares of the Commercial Investment Trust Corporation stock were sold on the New York Stock Exchange at prices ranging from 302 to 2934 per share. Respondent used the median of these two prices (30%) as the value of the shares in determining the amount of the gift in his deficiency notice for 1941.

The Commercial Investment Trust Corporation is engaged principally in the business of financing purchases of automobiles, refrig erators, and other appliances. Its shares are listed on the New York Stock Exchange. At December 31, 1941, it had outstanding 3,485,228 shares of common stock which were owned by more than 14,000 stockholders. A little less than half of those shares were held by 56 stockholders who held more than 7,500 shares each. Those stockholders consisted mostly of the officers and directors of the corporation and their relatives, holding companies, investment trusts, banks and other institutions. The company paid a 150 percent stock dividend

in 1929.

The financial condition of the company in 1941 was excellent. The book value of the shares at December 31, 1941, was $32.73 per share and only slightly less at the close of the preceding calendar year. The principal part of its assets consisted of cash and domestic notes and accounts receivable. The dividends paid on its outstanding shares amounted to $4.96 for 1936, $5 for 1937, and $4 for the next four years, including 1941. The daily sales of the stock on the New York Stock Exchange over the period July 21 to August 22, 1941, amounted to from 100 to 5,000 shares. The average number of shares sold daily over that period was a little less than 900. The sale price ranged from a high of 334 on July 21 to a low of 27% on August 12. During the week ended Friday, August 8, 1941, 3,700 shares were sold at prices ranging from 31 to 2934. On August 5, 1941, 1,500 shares were sold at prices ranging from 301⁄2 to 2934.

The fair market value of the 10,000 shares which petitioner transferred to the trust on August 5, 1941, was 30% per share.