Charles Evans Hughes

“ With respect to control of stock, as creating the affiliation which affords a basis for a consolidated return, section 1331 of the Revenue Act of 1921 is to the same effect as section 240 of the Revenue Act of 1918. The requirement of control, in the absence of legal title or beneficial ownership, is not satisfied by acquiescence or by business considerations without binding force. ”

“ The purpose of the Congress was to secure substantial equality among stockholders who ultimately bear the burden of taxation, and to prevent evasion through the manipulation of intercompany transactions. ”

“ There must be a control that is legally enforceable. Handy & Harman v. Burnet, 284 U.S. 136, 140, 141, 52 S.Ct. 51, 76 L.Ed. 207. And it must be control of 'substantially all the stock.' In Handy & Harman v. Burnet, supra, legally enforceable control of somewhat more than 75 per cent. of the stock was held to be insufficient. The question, then, is whether in the instant case the entire voting stock, preferred and common, should be considered in determining whether there was affiliation, or the common stock alone. ”