Court Opinion

ID: 6700334
Source: CourtListenerOpinion
Date Created: 2022-07-20 22:07:23.408951+00
Date Added: 2024-06-11T16:01:24.166712
License: Public Domain

RodmaN, J.
Pi’ior to 1943 our statutes permitted a taxpayer, in determining his income tax liability, to deduct from his income only those losses sustained during the income year. c. 158 §322 P.L. 1939.
This provision was enlarged by c. 400 §4 S.L. 1943. That Act amended subsection 6 of §322 of the Revenue Act (G.S. 105-147) by adding a paragraph reading: “Losses may be carried forward by the taxpayer for two succeeding tax years as a credit against income received in either of the two succeeding year’s subject to the following limitations: (Not here material). The deduction herein authorized shall be permitted in determining any income tax which shall become due and payable on or after January first, one thousand nine hundred and forty-four.”
This provision limiting the right to carry losses forward for a period of two years remained in effect until 1957. Plaintiff, when it filed its tax return, did not therefore seek to offset its 1953 loss against its 1956 income, but used for that purpose a part of the 1954 loss.
The Legislature, by c. 1340 §4 S.L. 1957, amended the statute relating to deductions by striking out the phrase "either or both of the two preceding income years” inserted by the 1943 amendment and inserted in lieu thereof the words “any or all of thd* five preceding income years,” making the statute read as now appears in G.S. 105-147(9) d.
Defendant contends this amendment is prospective in its operation and has no application to losses sustained prior to 1957. This contention requires us to ascertain legislative intent.
*728When the amending statute is examined in its entirety, we think it clear that the Legislature intended that a taxpayer, beginning with the year 1957, might deduct from -his income losses sustained during any of the preceding five years. It provides in subsection (bg): “Except as otherwise expressly provided herein, this Section shall take effect for income years beginning on or after January first, one thousand nine hundred fifty-seven.”
There is nothing to suggest that the Legislature intended to diminish the right granted taxpayers in 1943 to reduce their taxable income by the amount of losses sustained in prior years. Clearly it intended to enlarge the right. What may be deducted is prescribed by §147. If, as defendant contends, the 1957 amendment is prospective in its operation and only permits the deduction of losses occurring subsequent to 1957, taxpayers having incomes in 1957 and 1958 would be denied the privilege of deducting any prior losses for there is no provision saving to them the right to deduct losses sustained within two prior years; and the Commissioner was in error in deducting from plaintiff’s 1957 income the loss sustained in 1955. We cannot conceive that the Legislature intended any such result. It meant, we think, what the language used plainly says, namely, that deductions may be taken for losses occurring within -any of the five previous years.
This view is fortified by subsection (ail) amending paragraph 5 of subsection 6 (now 9) of G.S. 105-147 so as to limit the right of the taxpayer to take credit for the losses there described to those incurred during income years beginning prior to 1 January 1957.
The conclusion here reached conforms with decisive interpretations of the related Federal statute. Reo Motors v. Commissioner, 338 U. S. 442, 94 L. ed. 245, 70 S. Ct. 283.
Affirmed.
Higgins, J., not sitting.