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D (H and W) were sole shareholders in a personal holding company. W owned 80% of the stock. The real estate was owned by W prior to marriage. W and H continued to occupy it after their marriage and W spent and continued to spend large sums of money in keeping and beautifying the property. In 1931, the corporation was indebted to the bank for a large sum, and the bank insisted the residence be transferred to the corporation. This was done. H and W continued to occupy the residence as a home after the transfer. H was in the military during WWII but received from the corporation, the difference between his military pay and the salary he got from the corporation. The IRS took the position that the fair market rental value of the residence was to be included in H's gross income under Section 22. The tax court agreed.

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