Source: http://openjurist.org/324/f2d/33
Timestamp: 2013-12-13 05:46:53
Document Index: 166709427

Matched Legal Cases: ['§ 1346', '§ 1291', '§ 172', '§ 172', '§ 172', '§ 172', '§ 63', '§ 172']

324 F2d 33 United States v. Whitney Land Company | OpenJurist
324 F. 2d 33 - United States v. Whitney Land Company	Home324 f2d 33 united states v. whitney land company
324 F2d 33 United States v. Whitney Land Company 324 F.2d 33
UNITED STATES of America, Appellant,v.WHITNEY LAND COMPANY, Appellee.
No. 17268.
November 1, 1963.
Richard J. Heiman, Attorney, Dept. of Justice, Washington, D. C., Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson, I. Henry Kutz, Attorneys, Department of Justice, Washington, D. C., and Miles W. Lord, U. S. Atty., Minneapolis, Minn., on the brief, for appellant.
John W. Windhorst, Minneapolis, Minn., John S. Hibbs of Dorsey, Owen, Marquart, Windhorst & West, Minneapolis, Minn., on the brief, for appellee.
Before SANBORN and VAN OOSTERHOUT, Circuit Judges, and DAVIES, District Judge.
This is an appeal by the United States of America from final judgment of the district court in favor of taxpayer, Whitney Land Company, for $14,818.84, plus interest, for recovery of excess corporate income taxes paid for the year 1958. Taxpayer having paid the tax assessed and having filed timely claim for refund, brought this action pursuant to 28 U.S. C.A. § 1346(a) (1). This court has jurisdiction on appeal pursuant to 28 U.S. C.A. § 1291.
The facts are all stipulated and not in dispute. Taxpayer is a Minnesota corporation. It reports its income upon the cash basis method on a calendar year basis. Taxpayer sustained net operating losses for the years 1954 through 1957, inclusive, in the respective amounts of $18,363.14, $37,938.45, $5,063.40 and $3,148.19. In 1958 taxpayer had taxable income of $58,442.03 before application of any carry-over of any loss deduction. It is conceded that the 1956 and 1957 losses are available in full as off-sets against 1958 income. The problem arises with respect to the amount the 1954 and 1955 losses are available for offset against 1958 income.
Taxpayer had profits in 1952 and 1953. It is agreed that the 1954 loss must first be carried back to 1952 and that the 1955 loss must be carried back to 1953. It is clear that the 1939 Code provisions control with respect to the effect of the 1954 and 1955 loss carrybacks on the taxpayer's ultimate liability for 1952 and 1953 income and the amount of the tax due for such years is not here involved.
Taxpayer claims that the 1954 and 1955 net operating losses are to be reduced by the figures at line three in the following table. The Government contends that the net operating losses for the two years are to be reduced by the total of the figures appearing on lines one and four:
Items                                1952          1953
1. Net Income ........................ $19,724.16     $26,384.87
2. Dividend Received Credit ..........  16,765.54      22,427.14
__________     __________
3. Normal Tax and Surtax Income
(Item 1 less Item 2) ............ $ 2,958.62     $ 3,957.73
4. Exempt Interest Excluded from above
Figures ......................... $ 68.80        $    68.80
The problem presented is whether the 1954 and 1955 losses when carried back to 1952 and 1953 are to be reduced by the economic income for 1952 and 1953 under the provisions of the 1939 Code as contended by the Government, or by taxable income as such term is defined in the 1954 Code as contended by the taxpayer, prior to being carried forward to the next profit year which is 1958. There is no dispute as to the figures involved in the computations.
The trial court held that the language of § 172(b) (2) of the Internal Revenue Code of 1954 is clear and unambiguous; that said section is not modified in any relevant context by the other provisions of the 1954 Code; that the amount of taxpayer's net operating losses for 1954 and 1955 must be determined under the 1954 Code net operating loss provisions; that under § 172(b) (2) such net operating losses must first be carried back to 1952 and 1953 respectively; that the amounts of the net operating loss deductions for 1952 and 1953 must be computed under the 1939 Code net operating loss provisions; that for the purpose of computing the amount of net operating loss deduction for 1958, the extent to which the net operating losses for 1954 and 1955 were absorbed by reason of the carryback to 1952 and 1953 respectively, must be determined in accordance with § 172(b) (2); that under § 172(b) (2), taxpayer's net operating losses for 1954 and 1955 must be reduced by the taxable income for 1952 and 1953 respectively, as computed by § 63 of the 1954 Code; that under § 172(b) (2), the excess of net operating losses for 1954 and 1955 over the taxable income for 1952 and 1953 constituted a net operating loss carry over to 1958, and that taxpayer was entitled to the refund it claimed.