Case Name: Weissberger Moving & Storage Company, Inc., Petitioner, v. Commissioner of Internal Revenue, Respondent
Court: United States Board of Tax Appeals
Jurisdiction: United States
Decision Date: 1932-10-27
Citations: 26 B.T.A. 1375
Docket Number: Docket No. 42780
Parties: Weissberger Moving & Storage Company, Inc., Petitioner, v. Commissioner of Internal Revenue, Respondent.
Judges: Smith and Seawell agree with this dissent.
Reporter: Reports of the United States Board of Tax Appeals
Volume: 26
Pages: 1375–1381

Head Matter:
Weissberger Moving & Storage Company, Inc., Petitioner, v. Commissioner of Internal Revenue, Respondent.
Docket No. 42780.
Promulgated October 27, 1932.
Morley 8. Wolfe, O. P. A., for the petitioner.
Dean P. Kimball, Esq., and E. G. Adams, Esq., for the respondent.

Opinion:
OPINION.
Goodrich :
In this proceeding, which involves the redetermination of a deficiency of $228.49 for the year 1924, but one issue is involved, namely, whether petitioner may deduct from its income for the calendar year 1924 a net loss in the amount of $1,452.90 which it sustained in 1922. We must determine whether the calendar year 1924 is the " next succeeding taxable year " within the meaning of the statute, or whether, under the provisions of section 200 (a) of the Revenue Act of 1924, that calendar year must be divided into two " taxable years " because of an affiliation which occurred on July 1, 1924. The facts were stipulated, and that stipulation we incorporate herein by reference as our findings of fact. For the purposes of this report the following statement will suffice.
Petitioner was in existence and carrying on its business prior to and during the whole of the year 1924. Its accounts were kept and its returns filed on a calendar year basis. From its operations in 1922 it sustained a net loss of $1,452.90. The Victory Moving & Storage Company likewise was in existence prior to and during the whole of the year 1924. Its accounts were kept and its returns filed on a basis of a fiscal year ending June 30. On July 1, 1924, |oetitioner acquired the outstanding cajfital stock of the Victorjr Company. Thereafter the two companies were affiliated and each continued its operations during the balance of the year 1924. Petitioner filed a consolidated return covering its business for the whole of the year 1924, together with the income of the Victory Company for the period July 1 to December 31, and deducted thereon the net loss it sustained in 1922 and a net loss sustained by the Victory Company for its fiscal year ended June 30, 1924.
Respondent has allowed the latter deduction,, but denied the first beyond the amount of petitioner's income for the period January 1 to June 30, on the ground that the periods before and after affiliation on July 1, each constituted a separate taxable year, within'the meaning of section 200 (a), Revenue Act of 1924, and that the net loss of 1922 can not be applied to petitioner's income for the period July 1 to December 31, 1924, regarding that period as the third " succeeding taxable year." Petitioner contends that, so far as its own business was concerned, there was no change requiring it to file .a separate return for the period January 1 to June 30, 1924, and that even if it should have filed two returns, the calendar year 1924 is still one taxable year to which the 1922 loss may be applied, citing a number of decisions of this Board and the appellate courts in support of its position.
But the cases relied upon by petitioner arose under revenue acts prior to that of 1924 and were decided in view of the provisions of those prior acts respecting the definition of " a taxable year." The Congress wrote into the Revenue Act of 1924 (section 200 (a)) the following definition respecting the meaning of the term:
Tlie terra " taxable year " includes, in the case oí a return made for a fractional part of a year under this title or under regulations prescribed by the Commissioner, with the approval of the Secretary, the period for which the return is made .
See Strain Bros., Inc., 19 B. T. A. 601; Pennsylvania Electric Steel Casting Co., 20 B. T. A. 602; A. S. Siracusa Sons, Inc., 23 B. T. A. 53.
Here no separate return for the period January 1 to June 30, 1924. was filed by petitioner, but it seems clear that such a separate return was required of it, since both corporations were in existence prior to affiliation. American La Dentelle, Inc., 1 B. T. A. 575; American Steel Co., 7 B. T. A. 641; American Paper Exports, Inc. v. Bowers, 54 Fed. (2d) 508. Cf. Automatic Fire Alarm Co., 13 B. T. A. 1195; Suit Cattle Co., 17 B. T. A. 818; Margay Oil Corp., 26 B. T. A. 199; H. S. & M. W. Snyder, Inc., 26 B. T. A. 692.
The fact that petitioner failed to file a separate return covering that portion of 1924 prior to affiliation will not serve to defeat the plain intendment of the statute. A return for that period was required and, under section 200 (a) of the Revenue Act of 1924, that period constituted a taxable year for the purposes of applying to petitioner's income a net loss sustained in 1922. Tolerton & Warfield Co., 23 B. T. A. 692.
Respondent has correctly applied to the separate incomes of these corporations after affiliation the net losses sustained by them prior thereto in accordance with Woolford Realty Co. v. Rose, 286 U. S. 319. (Joseph & Feiss, 27 B. T. A. 852, overruled.)
Reviewed by the Board.
Judgment will he entered for the respondent.