American Trans-Ocean N. Corp. v. Commissioner of Int. R.
| Decision Date | 24 January 1956 |
| Docket Number | Docket 23468.,No. 54,54 |
| Parties | AMERICAN TRANS-OCEAN NAVIGATION CORPORATION, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. |
| Court | U.S. Court of Appeals — Second Circuit |
Murray M. Weinstein, New York City, for petitioner.
L. W. Post, Atty., Dept. of Justice, Washington, D. C. (H. Brian Holland, Asst. Atty Gen., Ellis N. Slack, Atty., Dept. of Justice, Washington, D. C., and Lee A. Jackson, Atty., Dept. of Justice, Washington, D. C., on the brief), for respondent.
Before SWAN, FRANK and LUMBARD, Circuit Judges.
This is an appeal by the taxpayer from a decision of the Tax Court on stipulated facts 13 T.C.M. 839 (1954). The taxpayer is a New York corporation. In 1948 it organized a subsidiary, Amtron Tanker Corporation, for the purpose of acquiring a tanker from the United States Maritime Commission. The subsidiary was organized because the Commission said that a direct purchase by the taxpayer might violate the Commission's regulations. The subsidiary purchased the tanker in 1948 and has engaged only in the business of operating that tanker. For 1948 and 1949 the taxpayer and Amtron filed consolidated returns. For 1949 there was a consolidated loss of $104,611.92, all of which was attributable to Amtron. The taxpayer was allowed a carry-back for 1948. The question here is whether the net loss can be carried back to 1947 as well. The taxpayer filed a separate return for 1947; it could not, of course, have filed a consolidated return since its subsidiary was not yet in existence. The Tax Court decided that it was not entitled to a carry-back, relying on its decision in Trinco Industries, Inc., 1954, 22 T.C. 959.
Section 141(b) of the Internal Revenue Code of 1939, 26 U.S.C.A., which is applicable here, provides that the Commissioner may prescribe regulations with respect to consolidated returns, and § 141(a) provides that the privilege of making a consolidated return shall be upon the condition that all the members of the affiliated group consent to all the regulations prescribed under § 141(b). It further provides that "the making of a consolidated return shall be considered as such consent." We are of the opinion that the applicable regulations dispose of the question presented in this case.
Section 23.31(d) (7) of Treasury Regulations 104 provides: "If an affiliated group filing a consolidated return for a taxable year beginning after December 31, 1941, sustains a consolidated net operating loss * * * and if there are included as members of such group one or more corporations which made separate returns * * * in a preceding taxable year * * * the portion of such consolidated net...
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