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*636OPINION.

Morris

: The transaction involving the stock of the Old Dominion Oil Co. we conclude to have been as follows: The company had a contract for the acquisition of two oil leases, being obligated to pay, $200,000 in cash and $200,000 out of the oil production, or a total of $400,000. It assigned the contract to its stockholders, each of whom agreed to pay an amount of cash equal to 40 per cent of his holdings in the company. The taxpayer owned $3,000 par value of stock, and, accordingly, was obligated to pay $1,200 to the owners of the two properties in the contemplated purchase. He did so, and presumably all of the stockholders did likewise. Thereupon, *637they became associated as owners of the enterprise related to those two properties, subject to the performance of the contract and Compliance with the resolution. Apparently, the company was to operate the two oil properties so acquired by the stockholders and, out of the oil production, to pay the balance of $200,000 of the purchase price and to credit to, and ultimately repay, the stockholders $200,000 for the cash they had paid. When those payments had been made, the stockholders were to transfer the two properties to the company and receive as a group (but with division based upon their proportionate ownership of stock at the time of their joint payment of the $200,000 to the former owners of the two properties) $200,000 par value in stock of the company. In other words, taking the taxpayer as an illustrative stockholder, for an investment of $1,200 in cash in the oil properties there was to be a return of $1,200 in cash during the period of the joint ownership with other stockholders (or the return of the investment) and 1,200 shares of stock upon a transfer of the properties to the company. But the transaction was not so carried out. The taxpayer received nothing in cash, and thereby must have agreed to some new arrangement. The oil properties were transferred to the company on August 20, 1919, and the taxpayer then received 2,400 shares of stock of the par value of $1 each, but having a then market value of $1.75 a share, or a total value to the taxpayer of $4,200. He had paid for his interest in the two properties $1,200, and so had a resulting gain from the transaction of $3,000.

The Commissioner construed the transaction to be a loan by the taxpayer of $1,200, which was paid back in the form of $1,200 par value in stock, which payment he treated as the equivalent of $1,200 in cash, and the other $1,200 par value in stock to be in the nature of interest for the use of the money so loaned. In determining the amount of interest received, the Commissioner noted the market value of the stock on the date of receipt to be $1.75 a share, and credited the taxpayer with the receipt of income, in -the form of interest, in the sum of $2,100. Upon the record presented to us there was no evidence that the transaction was a loan, but rather an investment. It is true that the resolution of the company states that the individuals were to receive out of the oil runs “ the full sum of $200,000 in cash, without interest,” but no money was, in fact, paid to the company as a loan or otherwise. To the contrary, the contract obligations of the company were assigned absolutely to the individual stockholders, and the $200,000 payment was made by them direct to the former owners. So, the “ $200,000 in cash, without interest,” could only mean that the company would have no right to insist upon a transfer to it until the individuals had received the flat amount, and no more, of $200,000. Accordingly, it is our conclusion that the *638addition to income was not tbe $2,100 determined by the Commissioner, but the sum of $8,000 gain, resulting from the transfer.

The taxpayer, at the time of making a sale of Pyramid Oil Co. stock in 1919, was the owner of 10,395 shares. The cost to him of these shares was as follows:

3,895 shares at $2_ $7, 790

5,000 shares at 50 cents_ 2, 500

1,500 shares at 0 cents- 0

10,395 shares, at a total cost of-10, 290

Of these, he sold 7,000 for $8,400. He forwarded his certificate for 3,895 shares (which we shall call A for convenience), and his certificate for 5,000 shares (which we shall call B) to the transfer agent of the corporation, with instructions to transfer to his vendee all of the 3,895 shares represented by certificate A, and 3,105- shares out of those represented by certificate B. It does not appear whether this was done or not — the Commissioner acted on a theory which made it unimportant, and whether the wishes of the taxpayer had been carried out or whether (as the Commissioner claimed but did not prove) the transfer agent actually transferred all 5,000 shares represented by certificate B and 2,000 out of certifiicate A. He found, for the purpose of making his determination, that the taxpayer had acquired the $2 stock through the exercise of rights to subscribe at that price which had been issued to stockholders, and applied article 39, Regulations 62, as amended by T. D. 3403, averaging the cost of stock held, and computing the profit on stock sold on the basis of this average cost. But he also found that the taxpayer was the owner of 42,743 shares of stock which had cost him an average of 57.82 cents per share.

But the taxpayer contends that he intended to sell his $2 stock first and his 50-cent stock next. He made somebody his agent to transfer the stock on the books of the company, and the Commissioner claims that the agent did not carry out instructions but transferred the 50-cent stock first and the $2 stock second.

The taxpayer adduced no proof of the order of sale; neither did the Commissioner. We have a situation where we are unable to find affirmatively which stock was sold first and which second; where we can not identify the sold stock with the different parcels of held stock. The Commissioner acted on the theory that some of the stock was acquired under rights to subscribe issued on account of the taxpayer’s stockholdings. There is nothing in the record to refute this. And there is nothing to show to which of the 50-cent stock or the stock which cost the taxpayer nothing (it must have been received as a bonus or as a dividend,) the rights to subscribe for the $2 stock were ascribable. In the circumstances, we *639think the Commissioner was right in theory — that the gain or loss should be computed on a basis of the average cost of all the stock acquired, just as in the case of a sale of stock after a stock dividend. But the Commissioner’s theory must be applied to the existing facts.

The uncontroverted evidence of the taxpayer shows that he was trustee of certain stock, that prior to the gift of 3,500 shares to his daughter he was the owner of 13,895 shares which cost him $10,290, or an average of 74.05 cents per share. He sold 7,000 shares of the 10,395 which he owned at the date of sale, at $1.20 a share, realizing a gain therefrom of 45.95 cents per share, or a total gain of $3,216.50, instead of $4,352.60 as determined by the Commissioner.

Relative to the gain resulting from the syndicate transaction in Belle Point Oil Co. stock, the taxpayer’s argument is predicated upon the premise that 900,000 shares of that company’s stock cost the syndicate 40 cents a share, or $360,000. The syndicate delivered 200,000 shares to the Hopewell Petroleum Co., at a value which was agreed upon for their purposes of 50 cents a share, with the result that the apparent total purchase price was $360,000. But the Belle Point Oil Co. relieved the syndicate of the $60,000 obligation, and the syndicate actually sold 546,421 out of the 700,000 shares at 50 cents a share, realizing therefrom $273,210.50. Of the latter amount the syndicate paid out as follows:

Hopewell Petroleum Co_j._$200, 000. 00

Syndicate expense (net)- 16,446.51

Belle Point Oil Co. to balance $100,000 for development purposes_ 9,180.00

225, 626.51

The resulting cash profit was $47,583.99. In addition, the three members of the syndicate had 153,579 shares of stock free and clear. At a valuation of 50. cents a share, the total gain to the syndicate was $124,373.49, and the portion attributable to the taxpayer was $41,457.83, instead of $44,518 determined by the Commissioner and $29,548.58 contended for by the taxpayer. The latter amount results from disregarding entirely the 153,579, shares and from increasing the gain of the syndicate by the $60,000 liability assumed by the Belle Point Oil Co. with the adjustments.

To be sure, there are syndicate transactions in which it is not proper to treat unsold stock on the basis of the sale price of sold stock, but we do not consider that such a situation is now before us. There was no evidence in this appeal that the syndicate could find no market for the 153,579 shares. It is just as permissible to assume that the shares were not sold because the three members of the syndicate expected to sell later for more than 50 cents a share, as it is to assume that the market was saturated. That they saw fit to pay $9,180 in cash to the company, is not inconsistent with their *640desire to retain stock rather than to sell it to others at a lower price than they expected to realize later. Certainly those who bought the syndicate stock at 50 cents considered it worth more, since they simultaneously bought treasury stock at $1 a share. We have had presented to us no better evidence of the value of the 153,579 shares than the market price obtained on sales of the 546,421 shares of like stock, which was 50 cents a share. Accordingly, the gain realized by the taxpayer from the sale of the assets of the Hopewell Petroleum Co. to the Belle Point Oil Co. was $41,457.83.

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How this case has been treated — in progress