Commissioner of Internal Revenue v. Moore, Inc., 11401.
| Decision Date | 30 October 1945 |
| Docket Number | No. 11401.,11401. |
| Citation | 151 F.2d 527 |
| Parties | COMMISSIONER OF INTERNAL REVENUE v. MOORE, Inc. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Carlton Fox, Sewall Key, and Helen R. Carloss, Sp. Assts. to Atty. Gen., Samuel O. Clark, Jr., Asst. Atty. Gen., and J. P. Wenchel, Chief Counsel, Bur.Int.Rev., and Charles E. Lowery, Sp. Atty., Bur.Int.Rev., both of Washington, D. C., for petitioner.
A. W. Clapp, of Atlanta, Ga., for respondent.
Before SIBLEY, McCORD, and WALLER, Circuit Judges.
The taxpayer in the calendar year 1941 had short term capital gains of $2,844, and a long term capital loss of $17,025. In the calendar year 1942 he claimed a net-operating-loss carry-over of $1,883 gotten by taking into account both the long term loss and the short term gain. The Commissioner thought that under the law in force in 1941 long and short term capital operations were separate, and since there was no long-term gain no long-term capital loss could be considered, with the result that there was no net-operating-loss to be carried over; and he assessed a deficiency. The question is whether Internal Revenue Code, § 122(d) (4), 26 U.S.C.A. Int.Rev. Code, § 122(d) (4), which deals with the treatment of capital gains and losses in determining the net-operating-loss carry-over to another year is to be applied as it stood in 1941, as the Commissioner urges, or whether, as the taxpayer contends and the Tax Court held (4 T.C. 404), the Section is to be applied as amended by Section 150 (e) of the Revenue Act of 1942, 56 Stat. 843.
Section 122(d) (4) in 1941 required in this connection that long-term capital gains and long-term capital losses shall be taken into account, but that the amount deductible on account of long-term capital losses shall not exceed the amount includible on account of long-term capital gains, and that the amount deductible on account of short-term losses should be similarly limited to the amount includible for short-term capital gains. Thus long-term capital losses were put in a separate category from short-term losses, and neither could cause a deduction only if and to the extent that a gain in its category was included in the account. It often happened as a result that a taxpayer could have no advantage of serious capital losses as a carry-over because his capital gains were of the other category. Evidently Congress thought this a fault in the law which ought to be remedied in the taxpayer's favor. The Section was so amended as to drop all mention of long or short-term capital gains and losses, and to provide broadly thus: The plain effect of this is to...
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