Corno Mills Co. v. Commissioner

CORNO MILLS CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Corno Mills Co. v. Commissioner Docket No. 36840. United States Board of Tax Appeals 21 B.T.A. 712; 1930 BTA LEXIS 1798; December 16, 1930, Promulgated *1798 NET LOSS - STATUTORY "TAXABLE YEAR." - Incident to the voluntary change in 1924 of the accounting period of the petitioner from a fiscal year ending November 30 to a calendar year, made with the full approval of the Commissioner, a separate return was filed and accepted for the month of December, 1924. Pennsylvania Electric Steel Casting Co.,20 B.T.A. 602, followed in holding that the one month of December, 1924, for which an income-tax return was made, was the third taxable year in the contemplation of section 206(b) of the Revenue Act of 1926 and that the unexhausted balance of the net loss for the year 1923 can not be carried forward and deducted from income for the year 1925. Frank H. Sullivan, Esq., and Edward W. Lake, Esq., for the petitioner. O. J. Tall, Esq., for the respondent. TRUSSELL *712 This is a proceeding for the redetermination of a deficiency in income tax for 1925 determined by the respondent in the amount of $18,127.18. The petitioner alleges error in the failure to allow as a deduction in 1925 a portion of its net loss for 1923. *713 FINDINGS OF FACT. The petitioner, an Illinois corporation, *1799 with principal place of business at East St. Louis, Ill., voluntarily changed its accounting period in 1924, with the full approval of the Commissioner. Incident to the change and pursuant to the provisions of section 226 of the Revenue Act of 1924, the petitioner determined its net income for the month of December, 1924, and it filed a separate return for that fractional period, which return, with respect to the period covered, was accepted by the respondent. The successive accounting periods and the results of the operations of the petitioner prior to the deduction of any prior year net loss were as follows: for the fiscal year 1922, net loss, $78,050.29; for the fiscal year 1923, net loss, $221,854.90; for the fiscal year 1924, net income, $85,748.88; for the fractional period of the month of December, 1924, net income, $10,038.29; for the calendar year 1925, net income, $143,810.88. In determining the tax liability of the petitioner for the month of December, 1924, the respondent has allowed as a deduction the remainder of the net loss for 1923 over and above the net income for the fiscal year, 1924. Such deduction exceeded the net income for December, 1924. In determining*1800 the deficiency the respondent has refused to allow any deduction whatever attributable to the net loss for 1923. OPINION. TRUSSELL: In the case of , the Board had before it a claim for net loss deduction in all respects similar to the situation in the instant case. It was there held that a net loss sustained during a fiscal year ending August 31, 1923 - * * * having been allowed as a deduction in computing the petitioner's net income for the fiscal year ending August 31, 1924, and in computing the petitioner's net income for the four-month period ending December 31, 1924, which period constitutes a "taxable year" within the meaning of the statute, we are of the opinion that the petitioner has had the benefit of the provisions of section 206. The decision of the Board in that case, applied to the instant case, will hold that the one-month period of December, 1924, is the third taxable year contemplated by the statute. Cf. , and *1801 . Judgment will be entered for the respondent.