Appeal of Rothholz Examining & Shrinking Co.

*722OPINION.

: The business of examining, shrinking, and waterproofing cotton and woolen goods is a part of the manufacturing processes *723by which such goods are converted into clothing and other articles suitable for the use of the wearers and users of such articles. In this process the element of personal service does not appear to materially differ from that of other manufacturing businesses in which the services of experienced men are required. The taxpayer’s business needed and employed shop equipment, office furniture, and delivery equipment of an average depreciated value during the year in question of $11,713.62. This is capital, and it surely can not be said of this business that such capital did not materially contribute to the production of income. We are, therefore, of the opinion that this taxpayer was not, during the year 1921, entitled to classification as a personal service corporation.

In the course of its business during that year, the taxpayer authorized and paid to two of its principal officers salaries of $5,145 each, which amounts, in view of the figures of gross and net income, seem to be reasonable compensation for the services of such officers.