Buckie Printers' Ink Co. v. Commissioner

BUCKIE PRINTERS' INK CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Buckie Printers' Ink Co. v. Commissioner Docket No. 40500. United States Board of Tax Appeals 19 B.T.A. 943; 1930 BTA LEXIS 2297; May 13, 1930, Promulgated *2297 NET LOSS - DEDUCTION IN CASE OF AFFILIATED COMPANIES. - The remainder of a net loss in 1922, after deducting the net income of the same taxpayer for 1923, is allowable as a deduction in computing net income for the third year, 1924, and the resulting net income or loss should be considered in full in arriving at the consolidated net income of a consolidation of which the 1922 loser is a member, even though such member had a loss for 1924 previous to deducting the net loss for 1922. Moore Cotton Mills Co.,17 B.T.A. 662, and Alabama By-Products Corporation et al.,18 B.T.A. 919, followed. R. A. Littleton, Esq., for the petitioner. Elden McFarland, Esq., for the respondent. TRUSSELL *944 This is a proceeding for a redetermination of a deficiency in income tax for 1924 in the amount of $606.16. The petitioner alleges error in the failure to allow the deduction of a statutory net loss for 1922 in computing the consolidated net income for 1924. FINDINGS OF FACT. The facts are all determined by stipulation of the parties as follows: Petitioner is a corporation organized and existing under and by virtue*2298 of the laws of the State of Illinois. During the entire calendar year 1924, the Buckie Printers' Ink Co., petitioner herein, and the Buckie Printers' Roller Co., a corporation organized and existing under and by virtue of the laws of the State of Illinois, were affiliated within the meaning of that term, as defined in subdivision (c) of section 240 of the Revenue Act of 1924; and said corporations filed a consolidated return of net income for said year 1924. At no time during the calendar years 1922 or 1923 were said corporations affiliated as defined by section 240 of the Revenue Act of 1924 or section 240 of the Revenue Act of 1921. For the calendar year 1922 said Buckie Printers' Roller Co. sustained a net loss as defined by section 204 of the Revenue Act of 1921, in the amount of $10,562.24. For the calendar year 1923 said Buckie Printers' Roller Co. had a net income as defined by section 232 of the Revenue Act of 1921, in the sum of $3,712.98. Pursuant to the provisions of subdivision (b) of section 204 of the Revenue Act of 1921, a portion of the said net loss for the calendar year 1922, to wit, $3,712.98 thereof, was deducted from said corporation's net income*2299 for the year 1923, leaving an excess of net loss for 1922 over net income for 1923 in the amount of $6,849.26. Exclusive of said excess of net loss for 1922 over net income for 1923 in the amount of $6,849.26, said Buckie Printers' Roller Co. had a net loss of $11,686.32 for the year 1924. For the year 1924 the Buckie Printers' Ink Co. had a net income of $18,535.58. The net income of the said affiliated corporations for the year 1924 was $6,849.26 (exclusive of the said excess of net loss of the Buckie Printers' Roller Co. for 1922 over said corporation's net income for 1923 in the sum of $6,849.26). The proposed deficiency of $606.16 involved herein arises solely out of the disallowance by respondent of the said sum of $6,849.26 (being the excess of net loss of Buckie Printers' Roller Co. for 1922 *945 over said corporation's net income for 1923) as a deduction from the said consolidated net income of $6,849.26 for the year 1924. OPINION. TRUSSELL: The sole issue in this case is a question of the carrying forward to 1924 (the taxable year) of a net loss suffered in 1922. We have previously had occasion to decide all of the points involved in this case. *2300 Section 206(e) of the Revenue Act of 1924 provides that the amount of the excess of a net loss for 1922 over the net income for 1923 shall be "allowed as a deduction in computing the net income for the taxable year 1924." In , we decided that a provision of the Revenue Act of 1921 similarly worded should be literally interpreted. In the instant case, then, the remainder of the 1922 net loss should be included in the allowable deductions to the Buckie Printers' Roller Co. for the taxable year. With respect to the resulting net income or loss to one of the affiliated companies, we held in , that the forwarded net loss should be considered in computing the consolidated net income. This decision was followed in , and must be regarded as controlling here. Judgment will be entered pursuant to Rule 50.