*98OPINION.
The question presented in this appeal, except in so far as it relates to the inclusion of the $50,000 par value of stock issued in 1915 on account of film contracts, is entirely one of fact. It is whether the film contracts and theater leases had an actual cash value. If so, such value should be included in invested capital. The burden is upon the taxpayer to prove the value, if any, of the said leases and film contracts.
The taxpayer relies upon the earnings of the corporation and the success which it attained in subsequent years to establish the value of the leases, film. contracts, and other intangibles, if any, which were turned over to it for stock when it was organized.
While subsequent earnings are not to be disregarded in determining values of leases and contracts, it must be kept in mind that it is only the value of assets shown to exist at the time stock was issued therefor which can be included in invested capital. The determination of values of assets paid in for stock must be made in the light of all available evidence existing at the date of the acquisition. Subsequent earnings may be used only to corroborate or substantiate a valuation based on the reasonable expectation of future earnings. A valuation, however, based upon the expectation of future earnings must be determined in the light of known facts existing at that time or upon past experience. A hope of future earnings not based upon some known facts or circumstances, or a mere guess by the owners as to the future earning capacity, however accurate it may be proven to be by subsequent events, does not prove value. Future earnings alone are not proof without reference to the facts from which they could have been reasonably anticipated. All facts and circumstances must be taken and considered together.
In this case the two Saengers secured leases on all the theaters mentioned in the findings of fact (except the Saenger Theater, which they owned) from outside interests. They dealt with them *99at arm’s length. The leases and contracts were acquired by willing purchasers from willing sellers, and no facts are shown which would warrant the conclusion that the sellers did not demand and receive all they were worth.
The Palace Theater lease was acquired by Saenger Bros, in May, 1912, without the payment of a bonus. The theater was closed within a short time after it was acquired by the corporation on August 14, 1913, the exact date not appearing in the record. It is contended that this lease had a peculiar value to the taxpayer and that the closing of the theater made the others more valuable by increasing the patronage thereof. But, if true, this would not be material. The only material inquiry with respect to this theater is whether the lease at the time it was acquired by the corporation for stock had an actual cash value. It is only the cash value, and not some peculiar value attributable to property by virtue of the use to which it is put, or the peculiar need of the taxpayer, which the statute provides shall be included in invested capital. Whether it at some subsequent time benefited one or more other theaters or increased the value of other theaters is not material if it did not have a cash value at the time acquired by the corporation.
No facts or circumstances are shown to have existed on August 14, 1913, when this lease was turned in to the corporation for stock, which did not exist in May, 1912, when it was acquired for $125 monthly rental, which would indicate that it had a greater value at the later than at the earlier date.
Shorter periods of time elapsed between the acquisition by Saen-ger Bros, of the leases on the Queen, Lyceum, and Princess Theaters and the time they were turned over to the corporation. The Queen Theater lease was turned over to the corporation by Saenger Bros., approximately four months after they acquired it from outside parties, on a monthly rental basis without the payment of a bonus or further consideration. The Lyceum Theater lease was turned over to the corporation approximately one month after it was acquired by Saenger Bros. The Princess Theater lease was turned over to the corporation one month after it was acquired by Saenger Bros. The record contains no evidence of any facts or circumstances which would warrant placing a diiferent value upon the above leases on August 14, 1913, when they were turned over to the corporation, from the value which they had at the time they were acquired by the partnership.
As to the lease on the Saenger Theater the record discloses no facts upon which the valuation of $42,000, or any valuation, could be based. It is not shown that it could have been rented to outside interests for an amount in excess of the rental required of this corporation. The experience of Saenger Bros, up to the date of the lease to this corporation, or the facts which existed on the date of the lease, did not indicate that this lease had any value.
In respect to the valuation of the film contracts, the witness gave a history of the development of the motion-picture theater business and the improvement of the films. It appears, however, from the testimony that the great advance and development of that industry did not occur or begin until subsequent to the acquisition of the film contracts by the taxpayer. It is contended by the taxpayer that the fact that it had the film contracts, which it acquired from Saen-*100ger Bros., enabled it subsequently to acquire other and better contracts. There is no evidence, however, that at the time acquired for stock, such contracts would at any time in the future have been of value in that respect. The record discloses no facts or circumstances existing on August 14, 1913, upon which the taxpayer, or its stockholders or directors, could have based a determination of the value of said contracts. No facts were presented which would indicate a reasonable basis for the anticipation of such future developments and future earnings.
As to the $50,000 par value of stock issued in 1915 to the stockholders in proportion to their stock ownership on account of the writing up on the books of the corporation the value of film contracts entered into with producers, the statute does not provide for the inclusion thereof in invested capital. This is not a case of the acquisition of assets for stock. The film contracts were entered into in the course of business between parties dealing at arm’s length. Neither stock nor anything of value was given therefor, except the consideration required for the use of the films. The corporation had already acquired the contracts before the determination was made by the taxpayer that they had any value over the price of the films. The issuance of the stock to stockholders when it was not issued for assets turned in to the corporation is immaterial. It has no effect whatever on invested capital. Only what the statute provides may be included in invested capital. There is no provision for including assets at a higher value than they had when acquired for stock, or at a value in excess of the investment by the corporation when they are acquired for other than stock from persons dealing at arm’s length. A bargain can not be capitalized. In its last analysis invested capital is what was embarked in the enterprise and subjected to the risks thereof. The film contracts entered into in 1915 did not represent any investment of the. corporation. The invested capital can not be increased by the writing up of the value of such contracts after they were entered into. This, in substance, is what the taxpayer is claiming.
The facts and circumstances relating to the above item bring it within the purview of the case of the La Belle Iron Works v. United States, 256 U. S. 377, where the United States Supreme Court used the following language:
It is clear that clauses (1) and (2) refer to actual contributions of cash or tangible property at its cash value contributed in exchange for stock or shares specifically issued for it; and that neither of these clauses nor clause (3) which relates to surplus, can be construed as including within the definition of invested capital any marking up of the valuation of assets upon the books to correspond with the increase in market value, or any paper transaction by which new shares are issued in exchange for old ones in the same corporation, but which is not in substance and effect a new acquisition of capital property by the company.
It is clear enough that Congress adopted the basis of “ invested capital ” measured according to actual contributions made for stock or shares and actual accessions in the way of surplus, valuing them according to actual and bona fide transactions and by valuations obtaining at the time of the acquisition * * *.
*101Having reached the conclusion, as a matter of law that the subsequently determined value of the film contracts can not be included in invested capital, it becomes unnecessary to discuss the evidence relating to the valuation of such contracts.
For the reasons above stated, it is the opinion of the Board that the taxpayer is not entitled to include in its invested capital for the years in question any amount based upon attributing any value to theater leases or film contracts acquired for stock or any amount on account of the writing up of the value of the film contracts acquired in 1915 and the issuance of stock to stockholders in proportion to their stock ownings on account thereof.