Hutt Contracting Co. v. Commissioner

OPINION.

Phillips:

The Hutt Cattle Co. was incorporated January, 1917. On May 1, 1922, the Hutt Contracting Co. was incorporated. These two companies filed a consolidated return for 1922. The Commissioner determined that a separate return should be filed by the Hutt Cattle Co. for the period prior to May 1, 1922, and a consolidated return for the balance of the year. The petitioner urges that this was erroneous; that one return is all that is required. We have previously held that where a corporation is organized during the taxable year, its first return is a return for the entire year, Carroll Chain Co., 1 B. T. A. 38; United States v. Carroll Chain Co., 8 Fed. (2d) 529; and that where, upon organization, it became affiliated with another corporation, there being no period for which the new corporation is required to file a separate return, a single consolidated return is to be filed for the two corporations for the taxable year. Automatic Fire Alarm Co., 13 B. T. A. 1195. The deficiency for 1922 should be recomputed accordingly.

During 1921, as well as 1922, the Hutt Cattle Co. sustained a net loss in the operation of its business. Such a loss would be available to it under section 204 (b) of the Revenue Act of 1921 as a deduction from its income for 1922, Alabama By-Products Corporation, 16 B. T. A. 1073. It had no income but a loss for that year. It is urged, however, that the loss in 1921 can be carried, over and used as a deduction in 1922 against the income of the affiliated corporations ; in substance, that the net loss of the Hutt Cattle Co. for 1921 may serve to reduce the taxable income of the Hutt Contracting Co. in 1922 because these two were affiliated in the later year. This must be denied on the authority of our decisions in Alabama ByProducts Corporation, supra; Sweets Company of America, Inc., 12 B. T. A. 1285; Owensboro Conserve Co., 8 B. T. A. 615; and American Steel Co., 7 B. T. A. 641.

Decision will be entered under Bule 50.