Whitaker, Judge,
delivered the opinion of the court:
Plaintiff sues for an alleged overpayment of excess profits taxes. It seeks to carry over to the taxable years 1944 and 1945 an unused excess profits credit to which it was entitled for the years 1941,1942 and 1943. This excess profits credit was computed upon the basis of its invested capital.
It alleges that the defendant erroneously computed the good will which it was entitled to include in its equity invested capital, in that it deducted from so-called “positive” good will of $3,217,700 so-called “negative” good will in the amount of $2,260,300. Plaintiff alleges that it was erroneous to deduct any amount from the “positive” good will found by the Commissioner of Internal Eevenue, the amount of which plaintiff does not contest. The propriety of this deduction is the only issue presented by the petition on the amount of good will to be included. It was the only basis for the claim for refund, except one that has now been abandoned.
Plaintiff also alleges that the defendant put an erroneous valuation on its land and buildings.
Defendant denies the allegations of the petition with reference to the valuation of land and buildings and affirmatively avers that the correctness of the valuations placed upon [609]*609them cannot be prosecuted in this action because a claim for refund based thereon was not filed within the time allowed by statute.
Thus, there are two substantive issues presented, to wit, the proper valuation of good will and of lands and buildings, and the subsidiary issue of whether or not the amended claims for refund, which first asserted an under-valuation of land and buildings, can be considered proper amendments of the original claim for refund, which was filed in time.
Plaintiff was formed, effective February 26, 1925, by the consolidation of the Thomas Cusack Company and its subsidiaries and the Fulton group of companies. Plaintiff issued its stock partly in exchange for certain shares of stock of the Thomas Cusack Company and of each company in the Fulton group, and partly for cash and, in addition, it acquired for cash certain stock of the subsidiary companies.
The Commissioner of Internal Revenue, in computing the good will of the companies acquired by plaintiff, capitalized at 20 per cent the earnings of each company in excess of 10 per cent of the value of their tangible assets. This resulted in a total figure of $3,217,700.00, which the Commissioner of Internal Revenue thought plaintiff was entitled to include in its equity invested capital on account of good will. He, however, reduced this amount by $2,260,300 on account of what he considered “minus” or “negative” good will of those companies whose net incomes were less than 10 per cent of the value of their tangible assets. In doing so, the Commissioner of Internal Revenue purported to follow A. R. M. 34; 2 C. B. 31 (1920), which was concerned with “methods of determining value as of March 1,1913, of intangible assets.”
Plaintiff’s main contention is that neither this memorandum nor any other provision of law gave any authorization for reducing the “positive” good will of some of the subsidiary companies, whose income was more than 10 per cent of the value of their tangible assets, by the “minus” good will of other subsidiary companies, whose income was less than 10 per cent of the value of their tangible assets. This is the only issue presented on the amount to be included in invested capital on account of good will. Plaintiff did not complain, either in its petition or in its claim for refund, of [610]*610the method employed by the Commissioner of Internal Revenue in determining the good will of companies earning more than 10 per cent of the value of their tangible assets; it complained alone of the deduction of “minus” or “negative” good will of companies earning less than 10 per cent of their invested capital.
Defendant does not admit that plaintiff acquired any good will as a result of the consolidation. It says that the parties at the time of the consolidation expressly excluded good will in determining the number of shares of plaintiff’s stock to be issued for the stock of the companies it acquired and, hence, it is not entitled to include anything in invested capital for good will. But in any event, it says, plaintiff is not entitled to more than the amount found by the Commissioner.
Good will is an intangible, illusory, sometimes an ephemeral thing. Sometimes it has great value. But, the determination of that value is exceedingly difficult. Not infrequently the Commissioner of Internal Revenue uses the rule of A. R. M. 34 for this purpose. Under this rule he capitalizes earnings in excess of 10 per cent, and attributes the excess earnings to good will, although he recognizes that the excess may be attributable to other causes, and although some companies currently earning less than 10 per cent may have substantial good will. A. R. M. 34 is a rule of thumb by means of which some fair approximation can be reached of what part of plaintiff’s income is attributable to the good will it has been able to build up in the trade. But, at best, it is only a rough approximation.
Ordinarily, the initial invested capital of a company is to be determined by the value of property paid in for its stock. This was the stock of the companies plaintiff acquired. The only basis for valuing their stock is the value of the assets of each, since there is no evidence of market value. The Commissioner of Internal Revenue thought that since some of these companies earned substantially more than 10 per cent of their invested capital, some amount ought to be included for good will. But he thought the plaintiff’s good will ought to be determined on the basis of the situation after the acquisition of all of the companies.
[611]*611It would be bard to find fault with this, although theoretically he should have considered each company separately, found the value of the stock it transferred for plaintiff’s stock, and included this in plaintiff’s invested capital. But we are dealing with that illusory, shadowy, intangible thing called good will, — what amount is plaintiff entitled to include in its invested capital on account of the good will it enjoyed as the result of its acquisition of the stock of each of these companies. In such circumstances, it would seem proper to look at plaintiff’s situation after the consolidation had been completed, in determining the value of everything it had acquired.
This would mean that we should take the aggregate value of all the tangible assets behind the stock of each company acquired by plaintiff and compare that aggregate with the aggregate income, and capitalize the excess over 10 per cent. This is what the Commissioner of Internal Revenue did in effect.
What he did in fact was to capitalize the earnings in excess of 10 per cent of each company. This he called positive good will. Then he capitalized the deficit under 10 per cent of each company earning less than 10 per cent. This he called negative good will. He then reduced the positive good will by the negative good will, and allowed plaintiff the balance as invested capital. It is obvious that the Commissioner arrived at the same result as if he had taken 10 percent of the aggregate invested capital and capitalized the excess of the aggregate income over this 10 per cent.
Such a method seems to us just and fair under all the circumstances. It reflects what plaintiff received as a result of the consolidation.
There is testimony in the record of certain so-called expert witnesses who testified to the value of plaintiff’s good will, but we find the computation made by the Commissioner of Internal Revenue more satisfying than this expert testimony. We think it more nearly approximates the actual value.
Besides, plaintiff in neither its petition nor in its claim for refund contested the valuation of the good will of the com[612]*612panies earning more than 10 per cent as determined by the Commissioner of Internal ."Revenue.
Furthermore, Mr. Hossack, of the American Appraisal Company, on whose testimony plaintiff chiefly relies, assumed increased earnings in the future, based upon the trend in past years. On the contrary, the valuation of the Commissioner of Internal Eevenue is based on actual experience, and not on supposition of what may happen in the future. “The lamp of experience,” we think, sheds the best light to guide our feet.
We are of opinion that the determination of the Commissioner of Internal Eevenue is correct under the circumstances.
The other issue concerns the valuation of the land and buildings.
The Trial Commissioner finds that the Commissioner of Internal Eevenue was not justified in reducing the valuation of the land and buildings placed on them by plaintiff. Defendant takes no exception to this finding. We have, therefore, adopted it. The valuations were those of the American Appraisal Company and the Ford, Bacon & Davis Company, reputable, nationally-known and recognized appraisal companies. These reductions must be restored. Plaintiff is entitled to have its excess profits credit computed on this basis.
But, the defendant asserts that the amendments of April 3, 1950 and April 14, 1950 first asserted an undervaluation of land and buildings, and that they cannot be considered as an amendment of the original claim for refund, which was based alone upon an undervaluation of good will, and, hence, it says, that plaintiff is entitled to recover only those tax payments which were made within two years of the filing of these amended claims for refund.
We are of opinion that the so-called amended claims for refund were not in fact amendments of the original claim, but injected new issues and that, therefore, the defendant is correct in saying that only those payments made two years prior to the filing of these amended claims can be recovered in this litigation, or so much thereof as exceeds the amounts which would have been due if the valuation of the land and [613]*613buildings bad not been reduced by the Commissioner of Internal Revenue. Judgment will be entered accordingly. The amount of the recovery will be determined pursuant to Rule 38 (c). If the parties desire to file a stipulation showing the amount due, computed in accordance with this opinion, they may have thirty days in which to do so.
It is so ordered.
Laramore, Judge; Madden, Judge; and Jones, Chief Judge, concur.
Littleton, Judge, dissents.
FINDINGS OF FACT
The court, having considered the evidence, the report of Commissioner George H. Foster, and the briefs and argument of counsel, makes findings of fact as follows:
1. The plaintiff is a corporation organized and existing under the laws of the State of New Jersey, maintaining its principal office at 515 South Loomis Street, Chicago, Illinois. It was incorporated February 7,1925, and began operations on March 2, 1925. Under the terms of its charter and by its operations, the company was both a holding and an operating company, authorized to engage and engaged in the business of outdoor advertising.
2. Plaintiff was formed effective as of February 26, 1925, pursuant to a plan for the acquisition of the stock, of two groups of corporations known as the Thomas Cusack Company and the Fulton Group of companies, mostly in exchange for the stock of plaintiff. The amount of stock issued by plaintiff in exchange for the stock of the predecessor companies was not on a fixed basis but resulted from continuous negotiations between the various parties. Blair & Company, Inc., acting for itself and associates, acquired 2,142 shares of preferred stock and 31,350.9 shares of common stock of the Thomas Cusack Company. For this stock and cash of $3,830,300, Blair & Company, Inc., received 125,000 shares of plaintiff’s Class A stock and 183,140.425 shares of plaintiff’s common stock. Plaintiff’s preferred stock was issued for bonds, preferred stock, and other securities of the constituent companies. The stockholders of the Fulton Group [614]*614of companies received 296,600 shares of plaintiff’s common stock in exchange for their stock in the prior companies. The stockholders of the Thomas Cusack Company, other than Blair & Company, received 141,859.575 shares of plaintiff’s common stock in exchange for their stock in the Thomas Cusack Company. In addition, 3,015 shares of plaintiff’s common stock were issued for cash and services. Plaintiff further issued 18,569 shares of its common stock in payment for the plant and equipment of the Chicago Poster Advertising Company. The common stock was not actually issued at the time of the exchange but was deposited with trustees and voting stock certificates were issued in representation of the common stock.
3. Plaintiff began operations on March 2,1925, and organized its accounting on a branch basis of accounting without, however, dissolving the subsidiary companies whose stock it had acquired. Some of the subsidiary companies were dissolved during 1925 but many were not dissolved for years subsequent to 1925. Several of the subsidiary companies filed separate income and excess income tax returns for the year 1925 instead of being included in the return filed by plaintiff for such year. Plaintiff did not acquire all of the stock of the Thomas Cusack Company by exchanging stock for stock because some of the Cusack stock was bought entirely for cash in the amount of $184,575.33. Other holders of the Thomas Cusack Company stock were paid cash at the rate of $20 per share in the amount of $862,421.
4. On or about the time plaintiff issued its stock for the stock of the constituent companies and then took over the accounts, various adjustments were made on the books of the constituent companies. Items of franchise, good will, investments in affiliated companies, and many other accounts in the total amount of $6,127,877.93 were written off the books of the constituent companies for lack of value or by reason of consolidation of accounts through mergers. Thereafter, the balance sheets submitted by plaintiff with its returns for the years 1925 through 1945 disclosed that good will was never set up as an asset on its books and records.
5. On or about May 14, 1945, plaintiff filed its return of income and excess profits taxes for the calendar year 1944, [615]*615with the collector of internal revenue for the First Illinois District, Chicago, Illinois. Thereafter, the Commissioner of Internal Revenue determined certain deficiencies in excess profits tax for the year 1944. Pursuant to assessments made against plaintiff for such taxable year, there have been paid or credited the following amounts of excess profits tax and interest:
Paid on Original Assessments:
March 15, 1945_ $7,572.72
March 15, 1945_ 255,000.00
May 15, 1945 (Includes $418.31 interest)_ 34,258.13
June 15, 1945_ 296,830.84
September 14, 1945_ 236,807.25
November 19,1945_ 118, 732.34
December 14, 1945_ 238,540. 41
1,187, 741. 69
Credited:
Code Sec. 784_$118, 732.34
Code Sec. 3806 (b)_ 56,875.45 175,607. 79
Total. 1,012,133. 90
Paid and Credited on Deficiency Assessments:
August 15, 1947, tax_ 225,000. 00
Interest (assessed 10/10/47_ 32,625. 00
257,625.00
Assessed 10/10/48:
Tax_ 83,493. 20
Interest_ 16, 028. 41
99,521.61
Paid by Cr. 8/24/48_ 22,116. 42
Paid by Cr. 8/24/48_ 62, 786. 59
Paid in cash 9/2/48_ 14, 618. 60
99, 521. 61
Total- 357,146. 61
6. On or about May 14, 1946, plaintiff filed its return of income and excess profits taxes for the calendar year ended December 31,1945, with the collector of internal revenue for the First Illinois District, Chicago, Illinois. Thereafter, the Commissioner of Internal Revenue determined certain deficiencies in excess profits tax for the calendar year 1945. Pursuant to assessments made against plaintiff for such tax[616]*616able year, there have been paid or credited the following amounts of excess profits tax and interest:
Paid on Original Assessments:
March 15, 1946 _ $453,750.00
June 14, 1946 _ 448,229.17
September 16, 1946 _ 450,989.58
December 16, 1946 _ 450,989.59
1,803,958.34
Paid and Credited on Deficiency Assessments of December 10,1948. The net sum of $381,882.33 of which $341,767.06 was tax and $40,323.40 interest, less an interest abatement credit of $208.13 on District Director’s Schedule I. T. E. 1007, July 1,1949: payments and credits follow:
August 15, 1947 _ $13,500.00
August 15, 1947 _ 150,000.00
January 5,1949 (Scheduled Cr. I. T. A. 141-280)- 13,798.04
August 27, 1948 - 21,345.20
August 27, 1948 _ 150,000.00
December 31, 1948 _ 33,239.00
Total_ 381,882.33
7. In determining plaintiff’s equity invested capital at the end of the year 1939, the Commissioner of Internal Revenue gave consideration to the factor of good will. A good will value of $957,400 was computed on the basis of the excess aggregate income for the five years, 1920 to 1924, inclusive, over 10 percent of the earnings on capital of the constituent companies. Because some of the annual figures of invested capital of the constituent companies were not available due to the lapse of time, it was calculated for the full five years rather than annually. Three subsidiary companies, General Outdoor Advertising Company of Virginia, General Outdoor Advertising Company of Connecticut, and General Outdoor Advertising Company of Georgia were excluded in calculating the good will since their accounts were not taken over by plaintiff in 1925 and they were not liquidated until the year 1936, at which time their assets were taken over and the value thereof at the date of liquidation was included in equity invested capital. The General Outdoor Advertising Company of Virginia was formed in 1925 by the merger of the Burton System, Inc. and the Dixie Poster Advertising [617]*617Company, Inc. Capital City Poster Advertising Company, Inc., in 1925 changed its name to General Outdoor Advertising Company of Connecticut and Eipley Poster Advertising Company changed its name to General Outdoor Advertising Company of Georgia.
In the determination of the sum of $957,400 for good will of plaintiff, the Commissioner employed the basis of A. E. M. (Appeals and Eeview Memorandum) 34, Internal Eevenue Cumulative Bulletin 2, p. 31 issued 1920 as “Methods of determining value as of March 1,1913, of intangible assets” for the purpose of determining gain or loss from a subsequent sale.
In the determination, the Commissioner found the annual average earnings or losses for each company in the group for the years 1920-1924 and compared such average with the average capital of each company, and capitalized the excess earnings over 10 percent of the average capital. In the case of a company whose average earnings were in excess of 10 percent of the capital, the excess was capitalized at 20 percent and the result was denominated good will.
In the case of a company whose average earnings were less than 10 percent of its average capital, the deficiency was capitalized and denominated minus good will. In the case of a company who sustained actual losses, the amount of the loss was added to the amount of 10 percent of the average capital and that sum was capitalized at 20 percent; this was also denominated minus good will.
The Thomas Cusack Company owned all of the capital stock of a number of other companies, all but three of which earned in excess of 10 per cent of their average capital. The Thomas Cusack Company itself operated at a net loss during the five-year period. The stock of the subsidiaries of the Thomas Cusack Company was not transferred to plaintiff in exchange for its stock; instead, the stock of the Thomas Cusack Company, the parent company, was transferred to plaintiff in exchange for its stock.
All of the companies in the Fulton group, save one, earned in excess of 10 per cent of its average capital during the five-year period. The stock of each of the individual companies [618]*618in this group was transferred to plaintiff in exchange for its stock.
The companies in the Fulton group, which earned in excess of 10 per cent of their average capital, had total earnings in excess of 10 per cent, in the amount of $2,198,100. One company in this group earned $44,400 less than 10 per cent of its average capital. The Commissioner of Internal Bevenue found that the net earnings of the Fulton group in excess of 10 per cent of the average invested capital of each was $2,153,100 in excess of the average capital. He also found that the Thomas Cusack Company and its subsidiaries earned $1,196,300 less than 10 per cent. He deducted this amount and $44,400 from the net earnings of the Fulton group, and thus arrived at his figure of $957,400, which he said was the value of the good will transferred by all these companies to plaintiff.
The computations as made by the Commissioner of Internal Bevenue produced $3,217,700 as good will of companies whose earnings were in excess of 10 percent of their capital and $2,260,300 as so-called minus good will for the companies whose income was less than 10 percent of capital, producing a net good will of $957,400. The only evidence of the existence of good will is the relationship of earnings and capital of the constituent companies for the period of approximately five years prior to the merger.
8. Claims for refund of excess profits tax for the taxable years 1944 and 1945, together with interest thereon, were filed on July 29, 1949, by plaintiff with the collector of internal revenue. These refund claims were grounded upon claimed increase in invested capital over the amount determined by the Commissioner of Internal Bevenue for adjusted excess profits credit of $2,260,300 for good will and an increase of $1,662,808.50 for common stock issued for services in the organization of the company in 1925. This latter ground has not been made an issue in the present proceedings.
9. A reexamination of the valuation of good will was made by the Commissioner in connection with the aforesaid claims for refund filed by plaintiff for the years 1944 and 1945. The engineer, in his report of March 3, 1950, stated:
[619]*619Keexamination of the facts and conclusions involved in that determination reveal a feature not made clear up to this point, that good will was computed on the basis of book values of the physical assets of the constituent corporations (cost reduced by depreciation allowed), whereas those assets were taken on taxpayer’s books at appraised values which appear to have been substantially higher than predecessor’s basis. Since good will value is determined by its effect in promoting higher than normal earnings on the net value of tangible assets employed in the business, any restatement of the value of such assets necessitates a corresponding reassessment of good will. In effect, in transferring assets of the constituent companies to taxpayer prior good will value was to some extent transmuted into tangible asset values.
Notice was taken of this inflation of tangible assets in the examinations for 1986 and later years only insofar as it affected real estate, the only one on which the excess had not by that time been fully recovered as depreciation. No purpose would have been served then by examining into the effect of taking “display plant” (billboards) of appraised replacement value of $16,214,911.00 onto taxpayer’s books with a reserve of 13.3% although over 50% reserve had been accumulated on those same assets by the constituent companies according to the engineering report of 11-5-43.
Since taxpayer has enjoyed the benefit of the increased valuation of physical assets in reduced taxable income due to higher depreciation allowances, it cannot properly claim that full credit for intangible assets must now be allowed to it to the total of the full amounts determined for the more profitable of the constituent companies without offset for what it characterizes as a non-existent factor of “negative good will.”
The best test of the soundness of the protested good will value determination is by analysis of the results of taxpayer’s operations immediately following organization. In the opinion of the undersigned, such analysis affords no support to the contention that at the time of organization its assets should be increased by any addition to the $957,400.00 previously allowed and accepted by taxpayer. It is, therefor, [sic] recommended that item 1 of taxpayer’s claims 20386 and 20387 for years 1945 and 1944, respectively, be denied.
10. Thereafter, plaintiff filed with the collector of internal revenue, Chicago, Illinois, other additional claims for refund for the years 1944 and 1945 under date of April 3,1950, and [620]*620April 14, 1950. These refund claims were grounded upon a reexamination of an inclusion of a claimed additional increase in equity invested capital on account of consolidated good will as part of the valuation basis of the stock in the constituent companies which was required pursuant to the plan of January 23, 1925. These refund claims contained a further ground of an assertion that a large part of taxable property had been appraised contemporaneously with the acquisition of stock of the constituent companies which appraisals constituted material factors in electing the number of plaintiff’s shares to be issued in exchange for stock of the constituent companies participating in the plan. These additional refund claims do not assert that an appraisal was made of the good will of the constituent companies in 1925 or that good will was considered in determining the number of shares of plaintiff’s stock to be issued in exchange for stock of the constituent companies.
11. The defendant, acting through the Commissioner of Internal Eevenue, by registered letter dated June 6, 1950, disallowed such claims for refund of excess profits tax in full.
12. The Commissioner of Internal Eevenue determined plaintiff’s equity invested capital for the purpose of excess profits credit at the beginning of the years 1941 through 1945 in the following amounts:
1941 - $18,724,293.58
1942 - 21,062,243.80
1943 - 20,990,513.47
1944 - 20,990,513.47
1945 - 20,990,513.47
13.In computing plaintiff’s equity invested capital at the beginning of the taxable years 1944 and 1945 and at the beginning of the taxable years 1941,1942, and 1943, for each of which earlier years there was an unused excess profits credit carry-over to the taxable year 1944, the defendant, acting through the Commissioner of Internal Eevenue, computed the value of the property consisting of stocks of the constituent companies listed in the plan and agreement of January 23, 1925, and the sum of $3,830,300 in cash paid in [621]*621for plaintiff’s stock as of February 26, 1925. This computation took into account certain adjustments in respect of items of good will, land, and buildings made pursuant to valuations placed on said items by the engineer revenue agent in a report dated November 5, 1943. Except for the amounts of adjustments in respect of good will, land, and buildings, it was agreed by the parties that the defendant’s determination of plaintiff’s equity invested capital for the years 1941, 1942,1943,1944, and 1945 is correct and proper in all respects.
14. In computing equity invested capital for the years 1941 through 1945, plaintiff claims that at the time of acquisition in the year 1925, the land owned by the former constituent companies had a value of $2,330,430.53 and the buildings owned had a value at that time of $1,648,890.34. The Commissioner of Internal Bevenue determined a value of $1,261,586.94 for land and $1,217,200 for buildings. In addition, plaintiff claimed values of property transferred to two subsidiaries in the amounts of $338,403.38 for land and $162,104.70 for buildings, both as of March 1, 1925. The Commissioner determined values of $154,326.55 for the land and $107,649.18 for the buildings. The values claimed and set up on the books of plaintiff in 1925 were those set forth in appraisals by the American Appraisal Company and the Ford, Bacon & Davis Company during the year 1924. The values determined by the Commissioner were purportedly based as nearly as possible upon sales of comparable property during the year 1925 but consideration was given to subsequent sales of some of the properties. In the determination of plaintiff’s equity invested capital, the aforesaid values determined by the Commissioner were adjusted to reflect the disposition and acquisition of property subsequent to the organization of plaintiff in 1925 and also for depreciation on the buildings.
15. The evidence does not disclose any justification for the reductions set forth in finding 14. There is no evidence of the amount of depreciation which should be charged against the unreduced value of buildings and other depreciable properties.
[622]*622CONCLUSION OF LAW
Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiff is entitled to recover so much of the payments made, on account of taxes due, as exceeds the amounts which would have been due if the valuation of the land and buildings had not been reduced by the Commissioner of Internal Revenue. Judgment will be entered to that effect. The amount of recovery will be determined pursuant to Rule 38 (c) of the Rules of this court. If the parties desire to file a stipulation showing the amount due, computed in accordance with this opinion, they may have thirty days in which to do so.